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After the home, vehicle purchase is the next largest expenditure for most people. The housing market has faced major declines before some recent signs of stabilization and an upturn. How have vehicle sales fared over the same period?
Auto and truck sales, both domestic and imported, can be said to have been elevated from 1999 to 2006. The late 1990s was the internet bubble wealth period. The bubble crashed, but people still bought cars because home values during that period were beginning to rise above the normal rate, thereby creating a housing wealth effect. People felt richer as a result, and they got their shiny new cars and SUVs.
From 2006 on, home values collapsed and destroyed the housing wealth created by the bubble. Car sales tumbled likewise. In the past 18 months, however, vehicle sales have started to rebound, even though housing wealth has not recovered. Some of the bounce could be due to the stock market wealth rebound. There is still a long way to go to in terms of reaching 16 million annual vehicle sales, which is about what it should be for the current population. But given the fact that people are feeling confident enough to buy a second major expenditure item, it could be just a matter of months before people make a move on housing purchases.
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