Future of aircraft pricing, 6months to a year from now.....

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Rand

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Rand
Looking at purchasing a Cessna someday and would like to get opinions on prices in 6 months to a year from now. The current prices are just ridiculous and I don't mind holding out. Do you think prices are heading down? I'm thinking a lot of the people that overpaid will be selling at a loss and I hope it will be a buyers market again. Thoughts?
 
It might be that prices stay the same but inflation catches up. Perhaps planes that don't sell right away also stay on the market at the same price until inflation catches up.
 
Rand said:
Looking at purchasing a Cessna someday and would like to get opinions on prices in 6 months to a year from now. The current prices are just ridiculous and I don't mind holding out. Do you think prices are heading down? I'm thinking a lot of the people that overpaid will be selling at a loss and I hope it will be a buyers market again. Thoughts?
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First, which Cessna? I don't 172s will be getting cheaper, they are too much in demand as trainers. 206s are in demand as working airplanes, and aren't likely to depreciate either. Early 210s and most of the twins may see some reductions. I don't have a read on the 182 market.
 
Although I think there is some argument for inflation/prices catching up, I also think there could be a significant drop...BUT...if there is a drop I think it will take much longer than the 6 months to a year that you are hoping for...probably more like 3-5 years, if history repeats itself (which it usually does).
 
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You can't time the market, keep wondering what a year will bring and you will always have an excuse not to buy. People have spent a life time sitting on the side tire kicking waiting for that drop in 6 months. I feel prices will not ever go down to pre pandemic prices. They might stay flat for a while but who knows.
 
How would any of us know? With interest rates rising, I would assume prices will come down, but it’s really hard to know where things are headed. Some claim there’s a recession on the horizon, others think we’re already in one. Can’t ever know for certain.
 
I believe if we are into a recession by the end of the year, products will not be bought, employees who work for those companies will begin to be laid off, wages will stagnate, and demand will drop. On a macro level, when demand drops prices will lower. This along with high interest rates will soften the airplane purchase prices. Now, if we keep losing the more entry level older airplanes to accidents, supply will decrease, and May offset everything I just said when it comes to aircraft market. My guess is we will see prices coming down after the first of the year through the winter months. But come spring when demand begins to peak as it always does, prices my level back off, but I suspect lower than right now.
 
Here’s something sad I thought of on this subject. Was talking to somebody about a 150 last week. He’s looking to sell and wants what he paid for it a year ago. I’m betting he’ll let it rust into the earth before taking a loss, so either prices aren’t going down, or we’ll see another big batch of derelicts falling apart at the airport. :(
 
As long as the airlines keep making flying more miserable and the scheduling less reliable, GA aircraft prices will stay high.
I am really tempted to sell my plane at today's prices, even if I don't replace it. But the thought of being at the mercy of commercial flight, there is no way I'm giving up my plane.
 
JOhnH said:
As long as the airlines keep making flying more miserable and the scheduling less reliable, GA aircraft prices will stay high.
I am really tempted to sell my plane at today's prices, even if I don't replace it. But the thought of being at the mercy of commercial flight, there is no way I'm giving up my plane.
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Flew 6.5 hours in the Lance yesterday. Honestly beat the airline schedule by a few minutes if you count driving to the airport (since I live on the departure airport) and waiting in line. If only it didn't cost 4 x more in gas.....
 
I think that prices on aircraft that are commonly used for training will remain strong. Others, especially the more fuel thirsty examples will fall off some when the recession materializes.

My $0.02,
 
Rgbeard said:
He wants to hear that in five years, $65k will buy him a low-time 4-seat, 4-cyl airplane with a decent avionics stack and a good engine. Sure enough that’s almost certainly true! (now someone’s said what you want to hear)
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I think that's what everyone wants to hear. Question is how likely is that to happen? I don't know, and I don't think anyone knows.


I think this hit the nail on the head.
simtech said:
You can't time the market, keep wondering what a year will bring and you will always have an excuse not to buy. People have spent a life time sitting on the side tire kicking waiting for that drop in 6 months. I feel prices will not ever go down to pre pandemic prices. They might stay flat for a while but who knows.
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Rgbeard said:
He wants to hear that in five years, $65k will buy him a low-time 4-seat, 4-cyl airplane with a decent avionics stack and a good engine.

Sure enough that’s almost certainly true!

(now someone’s said what you want to hear)
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You can get a decent baby Beech for that sort of money right now. Cessnas and Pipers aren’t the only 4x4s in the sky.
 
JOhnH said:
As long as the airlines keep making flying more miserable and the scheduling less reliable, GA aircraft prices will stay high.
I am really tempted to sell my plane at today's prices, even if I don't replace it. But the thought of being at the mercy of commercial flight, there is no way I'm giving up my plane.
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It’s not really by choice that makes people sell when the economy tanks…it’s people that buy aircraft with borrowed money, then when the economy tanks they have to choose between the mortgage (or food or kids college) and the airplane payment that forces the downward price cycle.
I just looked up registered GA aircraft numbers for this year: over 200k in the US. How many of those are financed (especially considering the recent buying frenzy)? If only 2% of the fleet wind up in default, that’s still thousands of aircraft forced to the market.
 
And btw, trade-a-plane’s single engine listings are just 10 listings shy of 2000 right now, which is the highest I’ve seen in the past couple of years…1765 on June 5th this year, and under 1000 two years ago.
 
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I think only a few shorter term things will flip GA to a buyers market:

1. For some unforseen reason the airlines completely halt hiring for 1+ years. The flight schools that hoarded Skyhawks and archers will start dumping them. Same for individuals that bought time builders.

2. If auto fuel comes back down below $3.25 a gallon or so and 100LL stops tracking it and stays at $7/gal or higher. But then even sniping buyers won't want the planes.

...at our airport (albeit) small i don't think anyone is financing a plane. It owes them nothing but another annual so why would they sell it unless due to health or outrageous fuel prices. And those elsewhere that have financed typically did it to have a plane, not crank a profit. Plus they finally found a hangar. Selling a plane during recession may be their last choice, not their first.

The other interesting one is higher insurance planes (twins, retracts, 6 seaters). It will mainly be older people being insurance premiumed out, but most new buyers thinking they're getting a bargain will be looking at insane initial premiums that require so many hours at higher fuel prices that they balk at the purchase.

Electric stuff that is certificated will probably also run so expensive (half million) that the vintage archer, Skyhawk demand will still continue.

Almost everyone I know that were renting a house waiting for that big collapse never saw the bottom and more importantly, just never had the guts to actually buy a house. They then spend the next sellers market phase moaning about how its not fair.

Just buy a plane now, get what you can afford. If you can't afford it now the odds are you won't be able to later either. Or you'll keep thinking it will go lower and have an excuse to wait it out again. Not trying to be mean. But you're not getting a plane for bargain, not after the first couple of annuals and all the other bills.
 
Prices will only continue to go up, just depends by how much and what rate. People who believe we hit some "peak" are of the opinion of what goes up must come down.

The other viewpoint: There is a foundation for price support:
  1. Ever higher new plane prices pull used plane prices up
    Big name training institutes buy new planes setting the pace for prices. Cessna and Piper have demand exceeding supply by over a year and more.

  2. Engine and Prop costs have increased 50% in past 3 years
    Engine pricing accounts for large portion of aircraft value. Can anyone imagine Lycoming or Continental reducing price in the future?

  3. Parts prices have dramatically increased
    Making non-airworthy plane worth more in parts value than fixing them into flying aircraft, further diminishing supply
Parts are more expensive, government regs are much tighter than years past for new entrants reducing competition, Salvage aircraft are more expensive.
 
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Country Flier said:
It’s not really by choice that makes people sell when the economy tanks…it’s people that buy aircraft with borrowed money, then when the economy tanks they have to choose between the mortgage (or food or kids college) and the airplane payment that forces the downward price cycle.
I just looked up registered GA aircraft numbers for this year: over 200k in the US. How many of those are financed (especially considering the recent buying frenzy)? If only 2% of the fleet wind up in default, that’s still thousands of aircraft forced to the market.
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That number (200k) includes renewals - probably majority of registrations …
 
I don't see Cessna prices coming down in the near future. Maybe in a few years once the airlines are back to a steady state and the training boom subsides. Another potential impact is boomer owners aging out of aviation which will increase supply...
 
It's hard to time this market, or any market imo. People calling a recession? Sure, but they don't know. All the suite and tie economists call this and call that to get airtime (TV, not on a plane lol). They don't know. Some 10% get lucky and get it right and they'll say "look, I told you so." The other 90% - well, we won't hear from them again until they have something else to say that will get them time on CNN, FOX or where ever they want to put their face.

Airplane prices: I already see a lot more good deals than I did six months ago. Some owners still demand $40k for a washed up Cessna 150. I doubt they'll sell. As some suggested, many of the planes that are overpriced will be taken off market and the poor plane will rot on the ramp. Hopefully a few years down the road, they'll become part donors for us who try to keep their planes flying.

Over the last 12 months, I bought two planes and I think I bought them at very reasonable prices. Deals are out there. If you want to buy a plane, don't rush it but keep your eyes open regardless of what "the market" does. Even in bad markets there are deals. Real world example:

I owned an Ercoupe and then we adopted an adorable puppy who was quickly growing into a big ol' 60 lbs dog. The Ercoupe became too small so I sold it last year for the exact same amount I bought it for two years prior ($27,500). I then started looking for a plane with decent useful load, preferably a Cherokee. That was last year in August. Nothing decent on the market. Everything was way too overpriced. In August, I saw a Cessna 172 for sale, engine TBO'd but fresh annual and seller wanted $25k. I called a day after the listing went live and the plane was gone. Market dry again. Then, I saw a local Cessna 150. Engine was approaching TBO. Seller wanted $22k, I offered $20k, no contingencies and he took it. I immediately gave the plane to my mechanic for an annual and nothing was wrong with the plane, other than looking a bit rough. I cleaned it up, patched the seats, painted the interior and flew the plane for 30ish hours, getting some ratings I was working on and just traveling. Sure, it wasn't a Cherokee but it had more space than the Ercoupe and puppy was still growing, about 35 lbs at the time so good enough to keep me flying while looking for a longer term plane. Then, in December a Cherokee came up. Low time engine, average time airframe, terrible looking interior. Seller wanted $35k, living about seven hours away. I called within an hour of the listing going live. Seller said he already got 7 calls - first person to pay a deposit will get the plane. I send him a deposit and signed purchasing agreement within an hour with one condition. He (or someone he knows) delivers the plane to me. He agreed. A week later, his buddy made the seven hour flight and delivered the plane. Once again, first thing I did was bringing it to the mechanic for an annual and new interior work. Plane didn't need anything major. The new interior (well, not really new - I bought a used interior in good shape - although the new carpet is really new) and first annual came out to $5,000. Had two other minor issues with it early on (tachometer and fuel selector valve) which cost me another $3,000 so essentially the plane ended up costing me $43k. Still a good $20k less than anything else I saw (or still see) with similar hours on the engine. Oh, and the Cessna 150, I ended up selling for $27k less than six months after I bought it for $20k. Funnily enough, even at $27k it was the lowest priced 150 on the market at that time.

Bottom line, if you're waiting for "the market" to come down, you'll keep postponing. It's just another excuse to not buy a plane. If you really want to buy a plane, don't look at the market, keep your eyes open for deals. You can make good deals during bad markets and you can make bad deals during good markets.
 
Deelee said:
I am pretty sure prices are going to go up. Or down. Or stay the same. I am confident in this statement.
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Exactly.

And also, what will interest rates due. Unless you are paying cash, the prices could go down, but if interest rates go up, you could end up paying more.

I recently purchased. I had to close quickly to hold my interest rate. One more day, and it would have gone up almost 1%. That would mean, for the same payment, the amount borrowed would have gone down by almost 10%.
 
Country Flier said:
It’s not really by choice that makes people sell when the economy tanks…it’s people that buy aircraft with borrowed money, then when the economy tanks they have to choose between the mortgage (or food or kids college) and the airplane payment that forces the downward price cycle.
I just looked up registered GA aircraft numbers for this year: over 200k in the US. How many of those are financed (especially considering the recent buying frenzy)? If only 2% of the fleet wind up in default, that’s still thousands of aircraft forced to the market.
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Hmm, unless the economy tanks their job, what difference would that make?

Unless they were doing ARM mortgages and flipping to keep the payments lower.

My mortgage is fixed rate. If I can pay it now, I can pay it next year. Same with the plane loan.
 
Pinecone said:
My mortgage is fixed rate. If I can pay it now, I can pay it next year. Same with the plane loan.
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Does that hold true if you extend yourself and then all of your other expenses go up, but your income doesn't go up as much? Or if you lose your income altogether? (assuming you still depend on a paycheck).
 
Chrisgoesflying said:
It's hard to time this market, or any market imo. People calling a recession? Sure, but they don't know. All the suite and tie economists call this and call that to get airtime (TV, not on a plane lol). They don't know. Some 10% get lucky and get it right and they'll say "look, I told you so." The other 90% - well, we won't hear from them again until they have something else to say that will get them time on CNN, FOX or where ever they want to put their face.

Airplane prices: I already see a lot more good deals than I did six months ago. Some owners still demand $40k for a washed up Cessna 150. I doubt they'll sell. As some suggested, many of the planes that are overpriced will be taken off market and the poor plane will rot on the ramp. Hopefully a few years down the road, they'll become part donors for us who try to keep their planes flying.

Over the last 12 months, I bought two planes and I think I bought them at very reasonable prices. Deals are out there. If you want to buy a plane, don't rush it but keep your eyes open regardless of what "the market" does. Even in bad markets there are deals. Real world example:

I owned an Ercoupe and then we adopted an adorable puppy who was quickly growing into a big ol' 60 lbs dog. The Ercoupe became too small so I sold it last year for the exact same amount I bought it for two years prior ($27,500). I then started looking for a plane with decent useful load, preferably a Cherokee. That was last year in August. Nothing decent on the market. Everything was way too overpriced. In August, I saw a Cessna 172 for sale, engine TBO'd but fresh annual and seller wanted $25k. I called a day after the listing went live and the plane was gone. Market dry again. Then, I saw a local Cessna 150. Engine was approaching TBO. Seller wanted $22k, I offered $20k, no contingencies and he took it. I immediately gave the plane to my mechanic for an annual and nothing was wrong with the plane, other than looking a bit rough. I cleaned it up, patched the seats, painted the interior and flew the plane for 30ish hours, getting some ratings I was working on and just traveling. Sure, it wasn't a Cherokee but it had more space than the Ercoupe and puppy was still growing, about 35 lbs at the time so good enough to keep me flying while looking for a longer term plane. Then, in December a Cherokee came up. Low time engine, average time airframe, terrible looking interior. Seller wanted $35k, living about seven hours away. I called within an hour of the listing going live. Seller said he already got 7 calls - first person to pay a deposit will get the plane. I send him a deposit and signed purchasing agreement within an hour with one condition. He (or someone he knows) delivers the plane to me. He agreed. A week later, his buddy made the seven hour flight and delivered the plane. Once again, first thing I did was bringing it to the mechanic for an annual and new interior work. Plane didn't need anything major. The new interior (well, not really new - I bought a used interior in good shape - although the new carpet is really new) and first annual came out to $5,000. Had two other minor issues with it early on (tachometer and fuel selector valve) which cost me another $3,000 so essentially the plane ended up costing me $43k. Still a good $20k less than anything else I saw (or still see) with similar hours on the engine. Oh, and the Cessna 150, I ended up selling for $27k less than six months after I bought it for $20k. Funnily enough, even at $27k it was the lowest priced 150 on the market at that time.

Bottom line, if you're waiting for "the market" to come down, you'll keep postponing. It's just another excuse to not buy a plane. If you really want to buy a plane, don't look at the market, keep your eyes open for deals. You can make good deals during bad markets and you can make bad deals during good markets.
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I think the part that some people have with this plan, is getting a plane to a mechanic we trust that can look at a plane and fix it and turn it around in a reasonable amount of time. Some of the wait times I am hearing for mechanics are eye watering. If you have "access" to a mechanic that you like and trust and can do quick work, then your way makes total sense and offers you a greater pool of planes to choose.
 
simtech said:
You can't time the market, keep wondering what a year will bring and you will always have an excuse not to buy. People have spent a life time sitting on the side tire kicking waiting for that drop in 6 months. I feel prices will not ever go down to pre pandemic prices. They might stay flat for a while but who knows.
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Exactly this. Take it from someone who bought a 182 in late 2021. Did I overpay? Well, compared to what? A market from years ago that doesn't exist anymore? One that might exist in the future? No sense worrying about any of that. I paid what I had to for a nice plane, and now I'm flying it and loving life!

I'd put it this way... Do you need the bottom to drop out to so you can afford the plane you want? I think you'll be waiting a long time for that to happen, if it ever does. Or is it just the emotional sting of "overpaying," or buying at the top of the market? If so, there is nothing to do but get over it. And trying to time the market, even if you get it right, comes at the cost of not flying. If you want to buy a plane, buy one so you can start complaining about the cost of fuel and mx.

I can tell you this: I have not once thought about how much I paid for the plane while I was flying it.
 
Has anyone done systematic data collection on the effect of past recessions on aircraft prices?
 
Rand said:
Looking at purchasing a Cessna someday and would like to get opinions on prices in 6 months to a year from now. The current prices are just ridiculous and I don't mind holding out. Do you think prices are heading down? I'm thinking a lot of the people that overpaid will be selling at a loss and I hope it will be a buyers market again. Thoughts?
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Probably not in the 'Cessna' bracket.

Consider them 'cash' airplanes, the same as 'cash' automobiles. The value holds relatively steady until crashed, or airworthiness repairs don't make financial sense.

What I'm interested in seeing is the Cirri/restart Cessna >$500k repossessions start.

Does Van Cartel buy up all the repo planes to keep prices inflated? Or do 'repo deals' start hitting TAP and run prices down?
 
Similar to ServoB17, compared to what? When a new pickup truck is over $50,000, maybe, just maybe, airplanes have been underpriced. I think the pandemic may have made people start thinking about how short life can be and if you want to do something, you might ought to get to it.
 
Regarding timing the market - when we got the Arrow in 2020, it was just at the start of the pandemic. We though - "hmmmm... maybe we should hold off... economy is going to tank and everyone is going to be selling off their toys...." We found a nice Arrow at a good price, worked out our deal and bought it. Then prices started going crazy. Glad we didn't wait and try to time it. Point is - good luck trying to time the market. If you want an airplane and find a nice one at a price that works for you and the seller.... get it. Or wait. Maybe prices will come down in a few months and you will find another. Maybe prices will stay the same or go up... and you will miss out on flying your (well, not yours since you didn't buy it) airplane for months and months until you (maybe) find another one at (maybe) a better prices. Or maybe a higher price. You aren't getting any younger. If you have the cash, can find an nice airplane and can afford it, why wait? Meh. Just my opinion as someone who can feel the clock ticking. We only have so many good years on this planet. And the good flying years are even less....
 
I'm in the market for a post '79 182 n/a to finish my PPL and IR and build time/figure what my realistic use will be in the 'next airplane'. I engaged a terrific broker who feels that prices have topped but not likely to backslide in the near future (next 6-12 mos). He is now starting to see a lot of the overpriced, in his opinion, aircraft sitting on the market. Some are starting to drop in price but only slightly. I am 59 years of age, 30 hrs into my PPL training, and I am not willing to wait longer for the market to drop. Quality life years have much more value to me at present than the extra dollars I may have to put down to get the airplane that is a good fit for my current plans. I am firmly planted in @Deelee 's camp.
 
Robin, you and I could be twins - except that I'll have to wait a few more years to buy my 182. Need to retire to have the time to fly enough and need a few years for markets to come back a bit so I can pay for it.

What broker are you using? Hadn't planned on it, but maybe as a first time - and maybe only time - buyer a broker might be worth it.
 
robin ardoin said:
I'm in the market for a post '79 182 n/a to finish my PPL and IR and build time/figure what my realistic use will be in the 'next airplane'. I engaged a terrific broker who feels that prices have topped but not likely to backslide in the near future (next 6-12 mos). He is now starting to see a lot of the overpriced, in his opinion, aircraft sitting on the market. Some are starting to drop in price but only slightly. I am 59 years of age, 30 hrs into my PPL training, and I am not willing to wait longer for the market to drop. Quality life years have much more value to me at present than the extra dollars I may have to put down to get the airplane that is a good fit for my current plans. I am firmly planted in @Deelee 's camp.
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Bear in mind that asking price and selling price are two different things, and with aircraft it's next to impossible to know what a plane actually sells for.

In the last couple of years, asking prices have been high and yet planes have sold quickly, so they likely sold at or near the asking price. What I expect will happen in the next year or two is that asking prices will remain high, but as planes sit unsold the owners will be more willing to negotiate to a lower price, so selling prices will come down.

This is why Vref isn't of much value most of the time. Vref goes by the asking price, not the selling price. In times of rapid sales, this may be close, but that's a short blip of time.

I think you're on the right track. Don't think of a plane as a financial investment where you worry about buying low and selling high. Just set aside however much you're willing to spend for the pleasure of flying, consider that money gone, and buy what you can with it. If you later recoup a bit of it on a sale, that's gravy, but not part of the purchase consideration.

When I raced cars, the prevailing wisdom was not to put any more money on the track than you were willing to hold between your fingers and use to light a cigar. For me, a hobbyist private pilot, a plane should be viewed the same way. Don't put anything into the sky that you're not willing to see turned into a flaming wad of melting aluminum. Then you can stop worrying about what the plane costs and just enjoy it.
 
If I buy a plane I’ll keep it until I can’t fly anymore. Which at that time and age I won’t care if I loose money in it. I’ll mentally put it into the bucket of buying a used car - you don’t expect to get your money back.
 
WDD said:
If I buy a plane I’ll keep it until I can’t fly anymore. Which at that time and age I won’t care if I loose money in it. I’ll mentally put it into the bucket of buying a used car - you don’t expect to get your money back.
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Pretty much my attitude about my Beech.
 
Half Fast said:
For me, a hobbyist private pilot, a plane should be viewed the same way. Don't put anything into the sky that you're not willing to see turned into a flaming wad of melting aluminum. Then you can stop worrying about what the plane costs and just enjoy it.
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This precisely.
 
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