I’m calling the peak

Country Flier said:
Done to hide the fact it is making metal...
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Bob Noel said:
or excessive oil usage
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Actually that would make a lot of sense given engine history... It's 2257H SFOH on the engine. Seems like they're doing a piece-meal overhaul lol.
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Not a plane I'm seriously interested in, but one that has caught my attention since I've seen it on TAP for like... a very long time.
 
ArrowFlyer86 said:
Actually that would make a lot of sense given engine history... It's 2257H SFOH on the engine. Seems like they're doing a piece-meal overhaul lol.
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Not a plane I'm seriously interested in, but one that has caught my attention since I've seen it on TAP for like... a very long time.
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A few years ago, I was considering buying a used A36. Within about 20 minutes of the delivery to my pre-purchase inspection mechanic, he called me and said he was not expecting it to go well...He noticed in the logs (and if you're trying to hide something, I'm not sure why you would log it) that in the past 6 months and about 15 hours, the plane had THREE (!!!) oil changes. Needless to say, it did not do well in our inspection. My mechanic speculated that it had failed 2 other pre-purchase inspections in the past 6 months as well.
 
I do oil analysis and log the results. Don't know how many owners do this but I think a good history with this would be helpful if/when the plane goes up for sale.

Yeah, three oil changes in fifteen hours is a hard pass ... :oops:
 
Had some free time today to stress test an analysis program I'm working on so I loaded in airplane listing data I've been collecting daily across sites.

Here's some highlights. First... asking prices.. Only for single engine piston planes (certified) by the major mfrs. Should be representative of the market, I think.
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The modest upward trend in pricing is deceptive. Asking prices have not gone up (i.e., mark-ups or new listings at higher price points -- there are 12x as many planes with a price cut than an increase), this is an artifact of the lower priced aircraft being sold or dropping out of the data. Nowhere has this been more evident than the Cirrus market where the lower priced, early model SR22s apparently got picked off shifting the average price up higher. The "market clearing price" for Cirrus is substantially lower than implied here. Nearly 4x as many sold below the average price than those above the price listed here. There's a lot of higher priced Cirrus inventory sitting.
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In fact, of ALL the aircraft across ALL manufacturers listed from a month ago still available today roughly 20% of them have had mark-downs, with an average mark-down value of 7.3%. The dollar value of that 7.3% discount varies widely, but on average it comes out to about 15k$. On a Malibu that be 50k$, on a Cherokee 5k$.

One of the biggest declines continues to be C182s (pre 1990s reboots). Compared to the median listing price the "selling" price is about 46k$ less. It's weakness is notable. AND it's avg asking price is declining a little.
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Also worth noting that 1.4x as many aircraft sold that were under the average price for that day (computed against the average price for that particular make/series the last day they were listed). Shouldn't be a total shocker, people are usually looking for deals and it's typically more competitive at the lower end of the market. But it's a substantial difference. I thought it'd be a bit more mixed. Maybe rates and price sensitivity are keeping people from buying the ones with sticker shock?

Weakest model(s): C182, Malibu (PA46) [this has low quantity so low confidence]
Strongest model(s): C172 by far. It's the only model category where more of the listings sold that were above average asking price than below.

Analysis weaknesses:
(0) Analysis only considers single engine piston market, major mfrs: Beech, Cessna, Cirrus, Mooney, Piper.
(1) We can't tell when an aircraft drops off if it's sold or just delisted -- for the purposes of this analysis any time an aircraft registration drops out of the data it's considered sold;
(2) If it did sell, we can't verify the actual sales price after inspection/negotiation... I think in this mkt fairly reasonable to assume the norm is not going to a bidding war above asking price like it was in 2020;
(3) Many aircraft cannot be uniquely identified in this data because they don't have a tail number listed. Without doing an involved webscrape it's not feasible to track those particular sales, so those are omitted in the sales data. They are however factored into the averages;
(4) Some people, for whatever reason, create duplicate sales listings of their aircraft - but only keep 1 updated with current price or sale status. It's not a major impact in the results, but it does impact a handful of them.
 
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Of aircraft that have been listed for 1 month, ~27% now have price cuts (up from 20% over that universe from 10 days ago).
Avg price reduction still hovering around 7%, just quite a few more offering discounts compared to 10 days ago.
 
ArrowFlyer86 said:
Of aircraft that have been listed for 1 month, ~27% now have price cuts (up from 20% over that universe from 10 days ago).
Avg price reduction still hovering around 7%, just quite a few more offering discounts compared to 10 days ago.
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Seeing same in the real estate market I am watching. I think a lot of sellers thought higher interest rates were temporary and hoped to wait it out. Recent Fed comments suggest higher rates are here to stay.
 
Ed Haywood said:
Seeing same in the real estate market I am watching. I think a lot of sellers thought higher interest rates were temporary and hoped to wait it out. Recent Fed comments suggest higher rates are here to stay.
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I think the era of ‘free’ money is done for a while and people are going to have to restart putting some skin the in the game (cash money down) if financing is going to be a part of the equation.

It’ll take a while for this to settle in as a mindset.
 
TCABM said:
I think the era of ‘free’ money is done for a while and people are going to have to restart putting some skin the in the game (cash money down) if financing is going to be a part of the equation.

It’ll take a while for this to settle in as a mindset.
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There seems to be a whole generation of young adults who have had access to virtually free money all of their lives.
 
Bill said:
There seems to be a whole generation of young adults who have had access to virtually free money all of their lives.
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*Raises hand.

So will there be a correction, or just a plateau?
And where should I set my hull value for my next renewal :confused2:
 
Barnstormers. Oct 10 2023. Review of Cessna 172N listed for sale.
11 aircraft identified for sale with clearly stated list price.
Average list price = $133,563. High = $195,000. Low = $88,000.
Average Engine SMOH = 894 hours. High = 1,850. Low = 85.

_______________Aug 2023____Sep 2023_____Oct 2023
Avg list price.___$123,204_____100,542______133,563
Avg SMOH.________1,140_______1,651________894
Count (N)__________11__________7___________11
Post #_____________509________573__________654
 
In real estate, it looks to me like there was a short, quick drop from the extreme peak of the frenzy in May 2022, followed by an 18 month plateau. Now we are starting to see a real correction, as inventory piles up and life events force sellers to stop waiting.

Would not be surprised to see similar pattern in airplane market.
 
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I've been watching the U.S. Malibu/Mirage/Matrix market for the past 18 months. The number of used (searched with 2021 as upper limit of age to eliminate new ads) a/c is 55. Last year the number was about half of that. The prices for Malibu's and older Mirage's have been falling too.
 
robin ardoin said:
I've been watching the U.S. Malibu/Mirage/Matrix market for the past 18 months. The number of used (searched with 2021 as upper limit of age to eliminate new ads) a/c is 55. Last year the number was about half of that. The prices for Malibu's and older Mirage's have been falling too.
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I've seen exactly the same. PA46s seem to be getting dumped, some with really aggressive price cuts, too.

Edit: the insurance cost on those seems to be outrageous from what I was reading.
 
Bill said:
There seems to be a whole generation of young adults who have had access to virtually free money all of their lives.
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Pretty well describes Xennial/Millennials like myself, at least in the era that it would have had any impact on my purchase of durable goods. Even worse, you might see many refusing (or limiting) the purchase of new goods when interest rates are higher than what they believe are acceptable. Generally good financial sense for not incurring more debt, but not so good for the general economy when people stop buying new cars/boats/aircraft/homes. Slows down velocity quite a bit unless sale prices start dropping by a large margin.
 
Perspective on interest rates is important. I bought my first house at 9%, and later refinanced at 6%. I bought my second house at 6%, and later refinanced to 3% and shortened the term to 20 years. It will be paid off next year.

Right now rates are at approx 7.5%. While that is not free money, neither is it apocalyptic. Younger folks will learn and adapt to changing conditions, just as previous generations did.
 
Ditto - my first mortgage was 10%. And that was a great rate.
 
first mortage was 12.5%

refinanced as soon as we could

but didn't overspend on the house, even though it had gone up in price by about 60% in less than two year.
 
Ed Haywood said:
Perspective on interest rates is important. I bought my first house at 9%, and later refinanced at 6%. I bought my second house at 6%, and later refinanced to 3% and shortened the term to 20 years. It will be paid off next year.

Right now rates are at approx 7.5%. While that is not free money, neither is it apocalyptic. Younger folks will learn and adapt to changing conditions, just as previous generations did.
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Or, younger folks will just decide not to incur debt at those rates until they come back down. They have a hard-enough time affording some of the sky-high property values that have occurred over the past decade, much less paying double or triple the interest rate on that inflated property value. I was very fortunate to have purchased my first home in 2010 amid the fallout of the 2008 financial crisis, which not only got me a LOT of house for the money, I also refinanced a few years back for 2.5% on a 15-yr note (was doing a major add-on/new windows/roof). I have no reason/need to move for the next 15years due to having young children in school, but I wouldn't even consider paying 10% interest on a mortgage. I'd just rent and save up the cash to buy outright on the assumption that I wouldn't be dropping $150K in interest on a $300K home in 10 years.

The 1980's may offer perspective on how high interest rates can be, but it's not something I'd consider acceptable to adapt to unless I was in dire straits.
 
SoonerAviator said:
Or, younger folks will just decide not to incur debt at those rates until they come back down. They have a hard-enough time affording some of the sky-high property values that have occurred over the past decade, much less paying double or triple the interest rate on that inflated property value. I was very fortunate to have purchased my first home in 2010 amid the fallout of the 2008 financial crisis, which not only got me a LOT of house for the money, I also refinanced a few years back for 2.5% on a 15-yr note (was doing a major add-on/new windows/roof). I have no reason/need to move for the next 15years due to having young children in school, but I wouldn't even consider paying 10% interest on a mortgage. I'd just rent and save up the cash to buy outright on the assumption that I wouldn't be dropping $150K in interest on a $300K home in 10 years.

The 1980's may offer perspective on how high interest rates can be, but it's not something I'd consider acceptable to adapt to unless I was in dire straits.
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I think this is spot on for my age group (mid 30s).
Pretty much my entire adult life money has been free or damn close to it. A 2.5-4% mortgage rate is something most people my age kind of took as something you could rely on. Even with rates now being closer to historical norms it's far outside what this group is used to.
Now that they've seen their friends and siblings buy sprawling homes for comparatively low prices AND low rates over the past many years -- the prospect of paying an inflated value with a terrible payment for a much more modest home seems like a losing deal.
Either they'll have to (1) get used to it over time... (2) wait for the next financial disaster so that the fed puts us in a 0% rate environment once again. Not sure what other options they have.
 
ArrowFlyer86 said:
I think this is spot on for my age group (mid 30s).
Pretty much my entire adult life money has been free or damn close to it. A 2.5-4% mortgage rate is something most people my age kind of took as something you could rely on. Even with rates now being closer to historical norms it's far outside what this group is used to.
Now that they've seen their friends and siblings buy sprawling homes for comparatively low prices AND low rates over the past many years -- the prospect of paying an inflated value with a terrible payment for a much more modest home seems like a losing deal.
Either they'll have to (1) get used to it over time... (2) wait for the next financial disaster so that the fed puts us in a 0% rate environment once again. Not sure what other options they have.
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If velocity of home (new and used) slows down enough because of people refusing to accept high interest rates (not that 7.5% is crazy at the moment), sellers of those home will have to drop pricing to entice buyers into a purchase. So you eventually get either A) lower property values, B) lower interest rates trying to bring more buyers in, or C) both. That ignores whatever strings the Fed/Gov't wants to pull behind the scenes. The Boomer generation has amassed over triple the housing that Millennial/Gen Z has and is perfectly happy with high property values for the most part, as it translates to more money when/if they go to sell it. The market standoff between Boomers and younger generations when that sell-off occurs in earnest will be interesting to see.
 
SoonerAviator said:
Or, younger folks will just decide not to incur debt at those rates until they come back down. They have a hard-enough time affording some of the sky-high property values that have occurred over the past decade, much less paying double or triple the interest rate on that inflated property value.….
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Or they flock to more affordable locations, which is happening in our little town on the outskirts of SAT. Austinites sell their property at bleeding edge prices to people moving to the state from high cost areas, then move to one of the bedroom communities down here that are at lower prices. Those sellers are leaving because they can’t/don’t want to afford the burgeoning property/school tax and then relocating farther out.

The convenient to existing infrastructure large and undeveloped tracts of land left to develop 600-home neighborhoods are shrinking in number so those sell at higher prices which in turn cost more to develop, which in turn cost more to build, which results in higher new home sales pricing. Kind of a vicious cycle.
 
TCABM said:
Or they flock to more affordable locations, which is happening in our little town on the outskirts of SAT. Austinites sell their property at bleeding edge prices to people moving to the state from high cost areas, then move to one of the bedroom communities down here that are at lower prices. Those sellers are leaving because they can’t/don’t want to afford the burgeoning property/school tax and then relocating farther out.

The convenient to existing infrastructure large and undeveloped tracts of land left to develop 600-home neighborhoods are shrinking in number so those sell at higher prices which in turn cost more to develop, which in turn cost more to build, which results in higher new home sales pricing. Kind of a vicious cycle.
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Yeah, that is an issue tangent to this discussion as well. My parents are sort-of in that situation, as they are a few years from retirement and are looking at land to build a nice (but smaller) home on. Their current home on a couple of acres has almost doubled in value since they built it in 2007 when it was more-or-less out in the boonies. They want more land, but have to move further out from their suburb to get it at a value they are willing to stomach. The urban sprawl keeps pushing people who want a more-rural lifestyle out to areas where land used to be pretty cheap, but prices keep going up due to demand. OK doesn't have nearly the severity of that problem that SAT does, but even the places that are low on the cost-of-living scale are feeling that pinch.
 
Separately in case anyone was curious where we're at in the cycle...

Chipotle is passing on their 4th menu price increase in 2y and is now promoting the buy now pay later feature so you can finance your fu**ing burrito. Apparently they've had it for a while, but now it's promoted as a way to keep the sticker shock of extra guac more manageable for the customer. I saw it on Twitter and had to Google it to make sure it wasn't a joke.

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I have this weird feeling that Americans might be short on cash soon. Also, if you have to finance a plane OK. If you have to finance a burrito, god help you.
 
SoonerAviator said:
The 1980's may offer perspective on how high interest rates can be, but it's not something I'd consider acceptable to adapt to unless I was in dire straits.
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I bought my first home around '88 or 89 and got a 17% note. A refi a few years later yielded a 11.8% note. We though we struck gold. And then...just like 20 years later...a sub prime savings and loan crisis hit and many banks folded (including the one my wife worked for). My current 'jumbo' mortgage is 3.5%. My financial planner keeps bugging me to pay down the loan in anticipation of retirement in a few years. I tell him that if he does his job well I should be making well over 3.5% on my money so it would not make sense to pay off near free money. ;)
 
robin ardoin said:
I bought my first home around '88 or 89 and got a 17% note. A refi a few years later yielded a 11.8% note. We though we struck gold. And then...just like 20 years later...a sub prime savings and loan crisis hit and many banks folded (including the one my wife worked for). My current 'jumbo' mortgage is 3.5%. My financial planner keeps bugging me to pay down the loan in anticipation of retirement in a few years. I tell him that if he does his job well I should be making well over 3.5% on my money so it would not make sense to pay off near free money. ;)
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Yup, which is why I haven't bothered accelerating any payments on the current 15yr mortgage that we're 3 years into. I can always appreciate the feeling of having it "paid for" earlier, but at under 2.5%, it makes zero financial sense to pull money out of savings or investments to do that. Even at S&P 500 averages, you're making 3 times that interest over the long term.
 
Circling back to aircraft pricing and why it's so expensive (lots of manual/specialized labor), I'm interested to see what new car/truck pricing does after all of a the UAW negotiations get finalized. We have already hit the peak on used car pricing, but once the impact of those price increases on new cars from the Big 3 hit consumers, we may see support for another jump in used car pricing.
 
A contact I have in a large beverage company is trying to explain how a price elasticity curve isn’t always straight to the executives. When prices get high enough anything becomes elastic.

Executives have raised prices many, many times. Now revenue - and profits - are down. I’ll give you 10 to 1 odds that they will raise prices again and be shocked, shocked I say when people buy even less.
 
WDD said:
A contact I have in a large beverage company is trying to explain how a price elasticity curve isn’t always straight to the executives. When prices get high enough anything becomes elastic.

Executives have raised prices many, many times. Now revenue - and profits - are down. I’ll give you 10 to 1 odds that they will raise prices again and be shocked, shocked I say when people buy even less.
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Lol sounds EXACTLY like what the aviation industry did!

Accountant: We're selling fewer C172 aircraft this quarter, what is our plan?
CEO: Increase sales price to make up for lost margin dollars.
Accountant (3 months later): We're still dropping in units-sold this quarter. Any new plans to boost sales?
CEO: Nah, just bump up prices again to cover.

30 years later: How in the hell does a C172 cost $400K?!
 
Accountant: look at our fantastic margins on each unit sold! BTW - we are selling only 1/10 of what we used to and can’t cover our expenses anymore. But - look at our margins! Executive bonus time!
 
I need used airplane prices to drop and the stock market to go up a little so I can pay cash. Can anyone arrange that ?
 
SoonerAviator said:
I'm interested to see what new car/truck pricing does after all of a the UAW negotiations get finalized. We have already hit the peak on used car pricing, but once the impact of those price increases on new cars from the Big 3 hit consumers, we may see support for another jump in used car pricing.
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Labor is only 15% of a car price. Automakers have been making record profits. But any excuse to raise prices, I guess.
 
172andyou said:
Labor is only 15% of a car price. Automakers have been making record profits. But any excuse to raise prices, I guess.
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Yup. A 20% increase in labor cost won't get by without a corresponding increase in sales price. Otherwise the stock market would balk at reduced profits and the execs stock options would be worth less. Can't have that!
 
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