The average "transaction price" – meaning what a used vehicle sells for – is now north of $30,000, a 5 percent increase over the previous year. That's slightly higher than the previous high-water mark of just shy of three years ago, at the height of the manufactured hysteria over "COVID."

But why – given that today lockdowns and supply chain disruptions are not happening? The answer is that new car prices never went back down. Indeed, they have risen even higher. The average "transaction price" of a new vehicle is now well north of $50,000. It will shortly – a few weeks from now – be impossible to find a new vehicle that has a base price south of $23,000 because the last new vehicle you can still buy for under $20,000 – the Nissan Versa – has been discontinued (more about that here).

The dynamic is that as the cost of new vehicles increases, the cost of used vehicles also increases – for two reasons. The first is that demand for used vehicles increases as people are priced out of new vehicles. They can only afford used vehicles, is another way to put it. There is a limited supply of used vehicles, too – which is a compounding factor. The second reason is that when a $50,000-plus new vehicle becomes a used vehicle, it will cost more to buy than a vehicle that cost $30,000 when it was new.

That's why a current three-year-old used vehicle "transacts" for nearly $32,000 now. Used vehicles will "transact" for even more, probably, three years hence because it is unlikely new vehicles will be "transacting" for less three years hence. The fact that they are already "transacting" for more this year than last year all-but-assures this.

There are some upsides to this. Particularly if you already own a used vehicle. That means, above all, that you do not need a new one – and that is the best way to avoid paying a ridiculous price for a new vehicle. In time, if enough of us avoid paying it, there will necessarily be a decrease in the cost of new vehicles because there will have to be. Assuming, of course, that the vehicle manufacturers wish to continue selling new vehicles. it is apparent to them already that something's got to give. They are well-aware that their dealerships are glutted with unsold inventory, some of it dating back to 2023. It isn't difficult to find a brand-new 2024 model on many dealership lots – even though it is just six weeks away from 2026.