Thursday, August 14, 2014

NYC Taxi Medallion Prices Have Flatlined for the Last Year Following a Decade of Steady Increases – The ‘Uber Effect’?

Mark Perry writes:
Following years of steadily increasing in value with annual gains of 12% in 2011, 15.6% in 2012 and 30% in 2013, the prices of New York City individual taxi medallions suddenly flattened out about a year ago (see chart above, data here). Since reaching a peak price of $1,051,000 in June 2013, the price of individual taxi medallions has remained flat for the last 14 months through July, and actually fell slightly to $1,045,000 in June and July of this year. Likewise, corporate taxi medallions have been flat at a price of $1,320,000 for the last 15 months starting in May 2013.

As can be seen in the chart above, the sudden flattening out in NYC taxi medallion prices represents an unprecedented reversal of a decade of steadily rising medallions prices, which have typically increased in value at a rate much higher than the S&P500 Index of stock prices...

 What has changed in the last year that would have stopped the historical rise in the value of NYC taxi medallions at a rate far higher than US stock prices? One word: Competition. Now that the NYC taxi cartel is being challenged by ride-sharing services like Uber and Lyft, the value of being a member of the NYC taxi cartel has stopped rising, and in fact will probably soon start falling.

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