Archives 2023

Introduction

2024 is poised to mark a period of stabilization and cautious optimism within the automobile dealership sector, following the tumultuous years prompted by the pandemic.

Cox Automotive has issued an economic report for 2024, with insights from their Chief Economist, Jonathan Smoke, who foresees a tempered growth outlook due to the impact of high interest rates and gradually receding inflation levels, which are expected to restrain consumer spending. Nevertheless, a transition toward a buyer’s market is on the horizon, characterized by the resurgence of incentives and heightened competition among dealerships, marking a departure from the seller-dominant environment of recent years.

Challenges

In response to the challenges ahead, dealerships are proactively seeking cost-saving measures to uphold profitability. While used car sales and service departments are anticipated to thrive, new car sales face hurdles attributed to escalating manufacturer prices (MSRPs) and dealer costs (invoices), potentially squeezing profit margins amid consumer price sensitivity. Furthermore, the uptick in interest rates and the imperative to invest in electric vehicle (EV) infrastructure pose additional financial strains for dealerships. Consequently, many dealerships are adopting a cautiously optimistic approach towards sales, prioritizing strategies to navigate economic headwinds and secure long-term viability.

Although electric vehicle (EV) sales are projected to continue their upward trajectory, the pace may be slower than initially forecasted, influenced by factors such as fluctuating demand, affordability challenges, and inadequate charging infrastructure. Recent closures of EV plants underscore a recalibration within the industry, revealing that consumer adoption of new EV models in the U.S. market hinges heavily on subsidies or financing incentives.

Trends

The trend towards online vehicle purchasing has gained momentum in recent years, necessitating dealerships to bolster their digital retailing capabilities and enhance online sales and customer service platforms. While physical presence remains integral to dealership success, effective online marketing and management strategies are pivotal in distinguishing between thriving and struggling dealerships. Cox Automotive anticipates a return to equilibrium in the U.S. auto market in 2024, heralding improved prospects for American consumers and fleet buyers who can expect a wider array of choices, enhanced deals, and greater accessibility to online purchasing tools.

Conclusion

Ferguson Appraisals has vast experience appraising automobile dealerships throughout Colorado, Wyoming and South Dakota. For current trends and insights, please contact us to assist with your investment needs. Other market insights can be sought from Cox Automotive at the link below.

Cox Automotive Insights

Market data is compiled by Ferguson Appraisals, LLC

The residential real estate market in Rapid City, South Dakota, has seen strong activity, driven by both local and out-of-state buyers. Factors contributing to this trend include the city’s scenic location near the Black Hills National Forest, Mount Rushmore, Crazy Horse and Sylvan Lake.

The Black Hills area of South Dakota offers affordable cost of living, and strong job market. Over recent years, Rapid City has experienced a sharp rise in home prices, reflecting a nationwide trend of increasing demand and limited housing supply. New construction has been underway, but inventory remains relatively tight, making it a competitive market for buyers. This is especially true for entry-level home buyers.

The market has also seen a mix of single-family homes, townhomes, and rental properties, with a growing interest in suburban and rural areas just outside the city. Overall, Rapid City’s residential real estate market is expected to remain active, with steady demand driven by lifestyle preferences, employment opportunities, and the region’s appeal as a desirable place to live.

Key residential statistics indicated by the local MLS indicate the following: 2024 (YTD) sales indicate a change in year-over-year average sale price of 5%. The change in year-over-year median sale price is 2%. The median annual percentage change in sale price over the last four years is 9% per year. The total sales volume in 2023 was $773,278,397 compared to the previous year’s total sales volume of $916,768,663. The 2024 (YTD) quantity of residential sales equals 1239. The quantity of sales in 2023 equaled 1993. Median days on market have ranged from 5 days to 9 days, based on the MLS data. Please note that current year statistics are incomplete.

Prices increased drastically during 2020 with low interest rates and pent-up demand for housing. Sales of homes in the area are typically purchased with conventional, FHA or VA financing with limited negotiating. The most predominant exposure period is two months or less with the median sale price being 97% of the list price.

For more detailed insights, feel free to reach out to Dustin Ferguson for the latest trends. Attached is the latest trends report created by Ferguson Appraisals, LLC.

Read More at: Black Hills SD Residential Real Estate Trends Report