Behavioral economics, Cognitive taste

Bicycle inflation in paradise?

IMG_0633.JPGPortland, Oregon, the current darling of America’s food and environmental writers, is arguably the county’s most bicycle-obsessed city. Bike use was up 28% in Portland between 2007 and 2008, and on the Hawthorne Bridge, a main thoroughfare, bikes now make up 20% of all vehicles. The New York Times estimated in 2007 that there were 125 bike-related businesses in Portland employing 600 to 800 people. There’s even a store in the city that sells only tricycles.

When I arrived in Portland last month, the first thing I wanted to do was buy a bike and get around the way the locals do. Since I wouldn’t be in town for too long, and it wasn’t clear that I’d be able to take the bike with me when I left, I wanted something extremely cheap.

There were bike shops on every other corner in Southeast Portland, the sort of Brooklyn-ish neighborhood where I was staying. I walked into what looked like the grungiest of them—a store that sold mostly used bikes. There was one employee, and he was heavily tattooed and seemed pretty cool. I completely leveled with him: I didn’t know anything about bikes, really; I could barely change a tire; I was only going to be in town for a little while, and I wondered if he had something cheap that I could use for puttering around town.

I know this is sort of quaint, but the last time I bought a bike, I think I spent $35, and it wasn’t hot. It was a road bike; it had 18 speeds, I think; it squeaked; and it served my needs (biking from my house to school every day) perfectly well. (The bike later died a peaceful death at Burning Man, but that was due to maltreatment, not poor quality.) I was looking for something like that.

The guy in the store asked me how much I wanted to spend.

I sort of stuttered my way and ultimately refused to answer the question because I was embarrassed to say something like “less than a hundred dollars,” for fear of coming off like Borat inspecting the Hummer before buying the ice-cream truck.

Yeah, the bike guy answered, he had something super-cheap for me, an old road bike that they’d fixed up. It wasn’t exactly my size, but it would do. It was a 1991 model, a Trek, I think; it was in good working condition, it had some newer components, and it came with a warranty. I could have it, he said, for $475.

So I went to another store. Same deal, more or less. There was one bike for $275, but it was a girl’s Raleigh from the 1960s with a wicker basket.

I started looking around the Web. At the down-to-earth-sounding Recyclery, another Portland used bike shop—and probably a great one—there are currently 59 used bikes on offer. But 34 of them cost more than $1,000, only eight are priced under $500, and there are none under $300. Even to rent a bike for one week from the Recyclery costs $175—more than I paid for my weekly rental car the previous time I was in Portland.

At Portland’s Costco, meanwhile—on the outskirts of the city—you can buy a brand-new Schwinn Midtown city bike with Shimano shifters for two hundred something dollars. But, according to the clerk there, those Schwinns aren’t moving.

I don’t doubt that the Schwinn Midtown is a far inferior bike, from the point of view of a bike connoisseur, to whatever’s being sold used in Portland. But you’ve got to love a city whose citizens put a set of moral/aesthetic principles—whether it’s riding a bike with proper disc brakes or refusing to support the Big Box stores—this far above their own financial well-being. And although every city has its bike aficionados, I think that in Portland, most people just buy rebuilt bikes locally because it feels right to do so, not because all these everyday bike riders can really tell the difference between Shimano TX-30 derailleurs and M-970 XTRs.

Still, what’s up with this bike micro-inflation? Why does there seem to be no market in Portland for used bikes that are actually cheap? Portland is otherwise a pretty cheap city. Beer is cheap. Used clothing is cheap. By major urban standards, housing is cheap, too, unless you compare it to the strip-mall-type cities. And certainly there are plenty of people in town who can’t afford to spend $475—never mind $1,000—on a bike.

I asked a few people in town about this, and got some general sense of agreement and common frustration: cheap bikes were impossible to find around here. The word on the street was that so many people were selling their cars (or taking their cars off the road) and using bikes to commute to work that there just weren’t enough bikes to go around. I also heard about a guy who was actually in the business of bicycle arbitrage—he would immediately snap up the few cheap bikes that would come up on Craigslist, fix them up a bit, put them back up on Craigslist, and make a good profit.

IMG_0519.JPG copySo I started looking at Craigslist—not just in Portland, but in other cities too, and not just at bike prices, but also at car and truck prices. I looked at a wide range of midsized-to-large cities that I thought represented a diversity of urban layouts, bike prevalence, wealth, and so on: Austin, Miami, New York City, Phoenix, Portland, San Francisco, and Seattle.

From each of these cities I collected an extremely basic data set: the asking prices for the 50 most recent cars/trucks and bikes advertised. I excluded children’s bikes, frame-only bikes, and non-working bikes; I excluded non-working cars and cars that were being sold for parts. I also excluded obvious dealer spam from each. Then, I looked at the medians. Here’s what happened:

Median price, first 50 items for sale on Craigslist, 8pm PDT, 8/13/09

Metro Area Cars/Trucks Bicycles
Phoenix $5,600 $120
Miami $4,800 $150
Austin $4,700 $168
New York City $4,700 $200
SF Bay Area $4,500 $240
Portland $4,500 $240
Seattle $3,500 $250

I didn’t run any serious statistical tests on the data set. This is because there are a few fundamental problems—the largest being that we’re not comparing apples to apples in terms of what’s being sold. That is, we don’t know if the same types of bikes are being sold for more in Seattle than in Phoenix, or if there are different types of bikes being sold in the two markets. The ads also change so frequently that replicating these results might be difficult; and 50 data points might be too small a sample.

Still, whether it’s over/underpricing or just selective selling, what struck me about this informal little analysis was that not one city fell out of line in the inverse order. Where cars were selling for the most, bikes were selling for the least; where cars were selling for the least, bikes were selling for the most; and so on, inversely, in between.

So, it looks like even though there are tons of bikes and bike shops in Portland, there still aren’t enough sellers in town to satisfy the strong demand in this biker’s paradise. Perhaps, in the long run, when enough arbitrageurs start shuffling bikes around the country (and enough arbitrageurs start underpricing each other to drive down their margins), more cheap used bikes will become available in the bike-friendly cities.

In the meantime, if you’re a Portland or Seattle resident thinking of selling your car and going green, maybe you should drive down to Phoenix and ride a bike back. You’d leverage both sides of the inverse relationship—plus there’d be some beautiful scenery along the way.


  1. Tom

    Those prices are UNREAL!

    For casual bike use on vacation I always go to wallymart, pick out the cheapest single speed huffy cruiser I can find (usually $85 or so), ride it like I stole it, and then donate it to some good cause before I leave town and take a tax write-off.

  2. Brennan

    I think this is generally true of Portland, at least for the last few years. However,
    1) You find a fair number of free bikes. I would have happily given one.
    2) Garage sales are the best opportunity. Still $50-$100 bikes show up.
    3) Community cycling center has cheaper bikes (NE on Alberta and ~15th or so). But not much cheaper.

    Anyway, interesting data set. Is it really the price/demnd equilibia that is different in PDX/Seattle, or is it that people tend to love their bikes more (or keep them as a status symbol)? Or is it land use restrictions that keep people from living near cheap big-box stores?

    the numbers would look more interesting if you divide by mean personal income.
    47k: PDX
    68k: SFO
    58K: Seattle
    48k: Phoenx
    48k/68k: N/Manhattan (Not sure what population craigslist represents)

    If you make the comparison on that basis, seems like portland is a much more bizarre standout.

    Finally, it is worth noting that the public transportation options seem to deserve some mention on this. You can live without a car in San Francisco or NY, you cannot in Phoenix.

  3. Jeremy Hartley

    Sounds pretty crazy to me. I’m writing this from the cycling capital of Euorpe – Amsterdam. Most people woldn’t pay $475 for a brand new bike here.

    Recently my bicycle was suffering some serious issues with its peddle axis and the woman in the bicycle repair shop said that it would cost 75 euros to fix it and that I’d be better off putting the money to a good new second hand one, since the rest of my bike wasn’t that good either. Ten minutes later I had a very good second hand one for 120 euros. Recently we decided we needed a third bike for when my mother in law is in town and we found one on marktplaats (the Dutch equivalent of Craigslist) for 50 euros. It wasn’t great, but perfectly rideable for a few days at a time.

    I guess demand for bicycles isn’t a new thing in the Netherlands. Another competing issue is bicycle theft. If I had been a less moral person, then I could have gone to a certain bridge near the University of Amsterdam and picked up a used bike for 10 euros. I wouldn’t have gotten a receipt, or guarantee. Since 10 euros is what a bike is worth on the black market, this has a downwards pressure on bicycles. Nobody wants to spend a lot of money on a bike and then see it stolen the next week. In fact an older, slightly beat up looking bike that still rides well is the ideal in Amsterdam, since it’ll get you to A to B and then once your done at B, it will stil be there to get you back to A again.

  4. Hi

    How about trying In London we got two great bikes here for free, and the shops were selling second-hands at around the same price you’re quoting. I’ve not joined the portland freecycle group to see if there’s anything there, but perhaps give it a shot.

    The bike I got for the price of picking it up down the street and cleaning it has Shimano shifters and all 🙂


  5. There is always demand for inexpensive and/or cheap bikes in Portland. I get the sense that people selling their bikes tend to have patience for a sucker to come along. Those bicycles with the inflated prices tend not to sell unless they are in high demand, i.e. something very specific such as certain year from a certain manufacturer.

    This inflated market has exacerbated the demand for bicycles that are more realistically priced. As an anecdotal example, I sold my Bike Friday New World Tourist at a price that I felt was fair. It was snatched up in less than an hour. There are great deals to be had; there are just so many people hunting for the deals that the fairly-priced end of the market is constantly tapped.

    This has led some people in the used market to think they can actually fetch high prices for their garbage. But if Craigslist ads are any indicator, those high-priced bikes are not selling. And the used bike dealers, at least the ones I ride past regularly, do not seem to be moving a lot of that overpriced inventory.

  6. Tad

    Wayne nailed it right between the eyes.

  7. Joe

    Three thoughts about this:

    1. Medians are skewed by the distribution of bikes. We’ve established there are a lot more high end bikes and bike riders in Portland. The average bike on Craigslist is a lot more likely to be something high end, and less likely to be a department store bargain.

    2. Demand. There’s a higher demand for bikes in Portland than other places. That would tend to push prices up above other cities. My brother, for example, has been trying to corner the market, at last count, I think he has 10 bikes.

    3. Seasonality. August is the best time to bike in Portland (no rain). You will melt in Phoenix, and Austin and Miami will be only slightly more tolerable. If there is any seasonality to demand (and prices) I would expect August to be a high month for Portland (and Seattle) and low in these other cities.

  8. Portland Native

    Should have checked out the Community Cycling Center. They are a great non-profit bike shop and have bikes for sale in front of the shop for as little as $40 bucks! They offer fixed bikes too, but provide un-fixed bikes for sale to the public and community tools to fix-em’. Wyane is absolutely right about the way the prices get inflated. Sometimes I see bikes that were for sale at the CCC on craigslist the next day for 2 or 3 times as much! Go figure.

  9. will

    Yes it is true. In the Northwest most bike-friendly city, used bikes are waaay over priced. Even the beaters you see chained up to stop signs on most street corners in S.E. Portland are going for over a hundred dollars! It’s ridiculous but true.

  10. Dear Portland, I miss you. - XOXOXO, Leeman

    Leave those Schwinn whatevers at the store. The bikes that the Recyclery, et al are selling have been worked on by competent (well, at least when I was working there they were) mechanics. Those Schwinns aren’t meant to be worked on, and only last about a year as daily drivers. For the carbon footprint you leave by buying disposable bikes, you might as well just drive around in a 1969 Plymouth that burns a quart of oil per tank, and has the entire exhaust system dragging behind you.

  11. It’s economics 101 – simple supply and demand. People sell bikes for more here in PDX because they can. Same with cars – it’s harder to sell a used car here. The story about the guy (more than one, actually) who snatches the bargains on Craigslist, oils the chain, and flips it for 300-1000% markup is true; I’ve been second in line more times than I can count, only to see the same bike re-posted in a day or 2 for A LOT more money. It gets a little better in the winter, but only a little.

  12. I responded to this article today and expanded on the difficult situation in the used bike market, in the Portland blog, Describe the Ruckus.

    I would love it if you gave it a read.

  13. The company needs to make inroads with today’s twentysomething bikers because of the dearth of thirtysomething ones. The prime age for motorcycle customers is 35 to 44, according to Donald Brown, a consultant to the industry. Brown says this age group’s numbers began to decline in 1999 and will continue to do so through 2016. Since Harley can’t replace all its boomer customers from a limited pool of busters, it must reach deeper than before into the youth market. The result, says Brown: “It will have to compete more head-on with the Japanese.”

  14. What an interesting post

  15. I always love to have my bicycle on vacations. This really a professional approach.Just for a bicycle he collected a complete statistics.But one thing is sure that i must bring own bicycle when ever i got chance to come to Portland .

  16. What’s the point? bicycles are cheaper than cars? oh, eurica..

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