Run-Up in Values of Hot Rods, Muscle Cars

Loses Steam as Funding Source Dries Up



March 11, 2008

The fallout from the credit crunch and housing market turmoil has reached the garages of classic car collectors. The value of some vehicles has declined by a third from two years ago.

Over the last decade, rising home values helped many Baby Boomers recapture their youth by buying American muscle cars and hot rods that were popular from the late '50s to the early '70s.

"Home equity was the ATM out of which a lot of people were withdrawing money to have fun," says McKeel Hagerty, CEO of Hagerty Insurance Agency, which specializes in classic cars. "What the credit crunch has affected is the bottom part of the market."

Ford Mustangs, Chevrolet Bel Airs and similar mass-market vehicles occupy what the collector-car industry calls the "enthusiast car" segment, with typical auction prices between $30,000 and $50,000. These cars are typically bought by casual owners rather than serious collectors.

"Many of these cars were built or bought using home equity loans," says Art Spinella, president of CNW Research, a Bandon, Ore. market analysis company.

With home-equity loans harder to come by, and potential buyers feeling less house-rich, prices have come down from their peaks.

"You can get a pretty good hot rod now for two-thirds what they cost two years ago," says Mr. Spinella. "They were getting $45,000 a year and a half ago, but you can buy all of them you want now for $30,000 -- really good ones."

The surge in demand in recent years helped push up prices for less-desirable four-door sedans or models with six-cylinder engines, but now they have returned to wallflower status.

"Many of the low-end Mustangs and Camaros aren't being lifted by the tide like they were," says Mr. Hagerty.

Still, the splashier, more expensive and more uncommon variants remain hot. A 1969 Shelby GT500, which is a customized version of a Ford Mustang, that was owned by racing legend Carroll Shelby recently sold for $675,000.

"Big-block [V8] models, those are going to have strong buyers," says Mr. Hagerty.

Another factor hurting hot rod values: the people who pined for them during their youth are getting older and less interested.

"As the population ages, the kind of cars they are interested in grows up, as well," Mr. Spinella says. "They reflect