Underpriced planes...

jfrye01

jfrye01

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Jacob Frye
Bellanca Viking comes to mind, fast little economical cruiser...found as cheap as $40-50K...what other planes come to mind as being underpriced or "underappreciated"?
 
The airplane market seems incredibly efficient. Cheap planes seem to be either poorly supported/orphaned or are expensive to feed.

Light Twins come to mind...

However, to answer you query: A nice balance between a Viking and, say, a 60's Bonanza would be an older Bo with the E series engine.
 
jhausch said:
The airplane market seems incredibly efficient. Cheap planes seem to be either poorly supported/orphaned or are expensive to feed.

Light Twins come to mind...

However, to answer you query: A nice balance between a Viking and, say, a 60's Bonanza would be an older Bo with the E series engine.
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There is a reason light twins are cheap, also a reason you see so many just sitting.

Best bang for the buck, smaller 2 seat taildraggers, tcarts, chiefs, a PA24 is also a great plane for the money, Grummans also are up there in value.
 
jfrye01 said:
Bellanca Viking comes to mind, fast little economical cruiser...found as cheap as $40-50K...what other planes come to mind as being underpriced or "underappreciated"?
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there are no "deals" in GA. The market is very efficient at assigning value. A $50K bellance viking is 2X too expensive. They are a slow, cramped, thirsty pig, that's why you can't give one away.
 
For me, the Luscombe 8 at under $20k in nice shape. Not so much underpriced as that is a market determination as mentioned but lots of bang for the buck as also mentioned.
 
alfadog said:
For me, the Luscombe 8 at under $20k in nice shape. Not so much underpriced as that is a market determination as mentioned but lots of bang for the buck as also mentioned.
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I love the Luscombe. Flew them as a kid. Unfortunately I grew up to be too tall and too wide in the shouldes to fit in one. sigh...
 
JoseCuervo said:
That article is 4 years old. In your opinion, is it still relevant and accurate given light of today's market conditions?
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Well, they haven't gone up in the last 4 years, that's for sure, I think they have bottomed out...
WARNING: if you bought a plane in 2005-2006, these will depress you :yikes:
Here is article from June 2013...
http://www.aopa.org/News-and-Video/All-News/2013/June/1/Used-aircraft-values-still-dropping
And another source, here is a chart for light singles Mar 2013:
http://www.planeviz.com/wp-content/uploads/2013/09/Light-singles-index.pdf
And for you Cirrus fans:
http://www.planeviz.com/wp-content/uploads/2013/09/2005-SR-22G2.pdf
 
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I owned a Luscome 8A. 65 horsepower which was a nice airplane. They should run 15 to 25 thousand depending on the shape they are in and the logs complete. Then there's the 8F , the later model which is 90 horsepower and it's a real fun airplane. Some have also been converted to 0200 engines. This is the model to buy. They get pricey if they are in first class condition. This model has a starter, transponder, complete rebuild, no corrosion ( important) and legible complete logs. A real nice one can run 45 grand and worth every penny if always hangered and in first class shape. Great airplane. Will do light aerobatics, easy to fly. Good looking. I'm 6 foot, 195 lbs. no problem.
 
jfrye01 said:
Bellanca Viking comes to mind, fast little economical cruiser...found as cheap as $40-50K...what other planes come to mind as being underpriced or "underappreciated"?
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A Bellanca Viking is not underpriced at $40-$50k unless it's sporting a full glass panel, and according to comments made when I was selling my 310, the glass itself has only 10% residual value on sale, so not even then. A brand new Viking is an Antique Aircraft the day it's built.
 
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One thing that us airplane owners often don't take into account is that our airplanes are getting older every year, so the value of a 77 172, in 2005 should be compared to a 86 172 today, right? :dunno:
As the newer models, like the restart Cessnas, age and become more affordable, it will keep the older models from appreciating as much, but they also shouldn't decline much either. :D
If you want to get depressed look at jets from 2007 to now! :mad2:
Turboprops have been a little more stable, but still down from 2007-8. Lots of panic selling that drove the prices down from 2007-2009/10. We are seeing a rebound from those prices, same with real estate, no where near 2006 levels, but up from the bottom for sure! :yes:

teejayevans said:
Well, they haven't gone up in the last 4 years, that's for sure, I think they have bottomed out...
WARNING: if you bought a plane in 2005-2006, these will depress you :yikes:
Here is article from June 2013...
http://www.aopa.org/News-and-Video/All-News/2013/June/1/Used-aircraft-values-still-dropping
And another source, here is a chart for light singles Mar 2013:
http://www.planeviz.com/wp-content/uploads/2013/09/Light-singles-index.pdf
And for you Cirrus fans:
http://www.planeviz.com/wp-content/uploads/2013/09/2005-SR-22G2.pdf
Click to expand...
 
No, depreciation isn't linear, it's geometric. Approximately the first 30% depreciates in the first 5 years 50% by 10 years, 100% by 20 years. After that the price is dependent on hours in the logs, equipment, and condition.
 
I loved my Super Viking.
Hauling grandkids on a sorta fixed schedule dictated two engines.
 
When I first purchased my 48, a guy on the field came over to introduce himself and talk about / examine my new (to me) bird. Seems back in the day, he bought and sold Bonanzas. He literally said "I wish you could have been there".

Long story short, he would buy one, keep it for a few years and then sell for more than he paid. Drop in a little cash and get basically a new one (maybe a few years old). An aviation world I never knew - but reflects the housing market (minus the bubble, free fall we are receiving from).

New world now. I finally decided I could sit on the side lines and try to predict the top/bottom of the aircraft market, or I could just set a budget and just get something I liked. (I'm not getting any younger...) I guess that is pretty much the way any market works anyhow ...
 
Who is going to buy. With a declining pilot population, planes for sale with less pilots to buy.
private-pilots-graph-300x217.jpg
 
It appears that GA is in dire need of another world war to rejuvinate the population.

Oh, wait, that might simply produce more drone pilots. :)
 
Probably the only true values I can think of would be the Grumman AA1, older Bonanza's, and the Ballanca Vikings in the 30's. Of course the light twins are good deals and almost worth buying just to part them out.

Just about any experimental aircraft can be considered a bargain though.
 
Henning said:
No, depreciation isn't linear, it's geometric. Approximately the first 30% depreciates in the first 5 years 50% by 10 years, 100% by 20 years. After that the price is dependent on hours in the logs, equipment, and condition.
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I haven't seen any planes selling for zero dollars.
 
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brien23 said:
Who is going to buy. With a declining pilot population, planes for sale with less pilots to buy.
private-pilots-graph-300x217.jpg
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While that chart shows the direction of the change correctly, it exaggerates the magnitude of the problem by cutting off everything below 190,000.
 
Palmpilot said:
I haven seen any planes selling for zero dollars.
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Lol, not price, depreciation, the terminus of the decline of value over time. Depreciation can stop at any number and remain stable at that number indefinitely depending on condition and ability to fulfill the required service.

This doesn't of course factor in obsolescence, but that's really not a fact with airplanes at the moment, there is no technology on the horizon to make our airplanes obsolete.
 
Palmpilot said:
I haven seen any planes selling for zero dollars.
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The depreciation is not the entire price/value of an airplane. At the 100% depreciation point, the only remaining value is the actual utility of the airplane and what the market values that at. There is no "newness" value left in it.
 
interesting there's no Cessna mentioned so far.

I think the Piper PA-30 is underpriced for what you get. Some models of the Aerostar are also pretty cheap considering the performance offered. I have the early Bonanza, and bought it in part because I consider it a value, not really underpriced, but certainly not overpriced.

A while back I thought the Cherokee was a good bargain, but it was just a loss leader on the way down.
 
jhausch said:
The airplane market seems incredibly efficient.
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JHW said:
there are no "deals" in GA. The market is very efficient at assigning value.
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Um, couldn't one then also use the "efficient market" concept to conclude that there also no overpriced planes for sale?

Maybe, just maybe, the "efficient market" hypothesis is bunk or otherwise useless?
 
Jim Logajan said:
Um, couldn't one then also use the "efficient market" concept to conclude that there also no overpriced planes for sale?

Maybe, just maybe, the "efficient market" hypothesis is bunk or otherwise useless?
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Ow, I hope it's not bunk. Basically our entire planet commercial markets are based on an efficient market. Of course, there are a lot of things poking the efficiency, most often a govt but by and large, goods and services are exchanged on a market need/price that represents a good efficiency.
 
Henning said:
This doesn't of course factor in obsolescence, but that's really not a fact with airplanes at the moment, there is no technology on the horizon to make our airplanes obsolete.
Click to expand...

No technology to make older airplanes obsolete, but the cost of maintaining them, engine overhauls etc, will make them economically obsolete. At some point it's just not worth putting a lot of money into an old basic spam can.:no:
 
Jim Logajan said:
Um, couldn't one then also use the "efficient market" concept to conclude that there also no overpriced planes for sale?

Maybe, just maybe, the "efficient market" hypothesis is bunk or otherwise useless?
Click to expand...


Long time since I took Econ and Finance classes with Efficient Markets, but, as I remember, there had to be lots of buyers and lots of sellers to be efficient.

I think the airplane market is anything but efficient. Way too few buyers and sellers, too few substitutes, and too much emotion on the parts of buyers and sellers ( in the non-corporate market).

I was the only one who even test flew the plane I bought in the 11 months it was on the market.
 
Jim Logajan said:
Um, couldn't one then also use the "efficient market" concept to conclude that there also no overpriced planes for sale?

Maybe, just maybe, the "efficient market" hypothesis is bunk or otherwise useless?
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you can offer anything "for sale" at any price. that's not a transaction, itis idle conversation.

to rephrase your question into something that relates to a market, there are no overpriced planes that SELL
 
Jim Logajan said:
Um, couldn't one then also use the "efficient market" concept to conclude that there also no overpriced planes for sale?

Maybe, just maybe, the "efficient market" hypothesis is bunk or otherwise useless?
Click to expand...


OK - to handle the over-priced birds, I'll hedge my comment by saying it's not a market if nothing changes hands
:)

You could probably run some fancy math on the listing prices, throw out the outliers, and offset by some likely small discount and have a good idea of actual selling prices.

Unfortunately, there is no real repository of actual sale prices to confirm my theory.

docmirror said:
Ow, I hope it's not bunk. Basically our entire planet commercial markets are based on an efficient market. Of course, there are a lot of things poking the efficiency, most often a govt but by and large, goods and services are exchanged on a market need/price that represents a good efficiency.
Click to expand...

Reminds me of the joke I think Buffett used to tell:
Two economists who believed in the efficient market theory were walking down the street.
One notices a $100 bill on the sidewalk.
They both walk past because if it were a real $100 bill someone would have picked it up already.
 
N747JB said:
No technology to make older airplanes obsolete, but the cost of maintaining them, engine overhauls etc, will make them economically obsolete. At some point it's just not worth putting a lot of money into an old basic spam can.:no:
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absolutely. It's also not worth putting money into a golf membership, the residual value at the end of the season is nil. Likewise snow skiing trips, I have yet to be able to sell one after the trip for anything near what we put into it.

Light aircraft are a HOBBY. Not an INVESTMENT. We spend money on them because WE ENJOY IT. Why is this so difficult to understand?
 
JoseCuervo said:
Long time since I took Econ and Finance classes with Efficient Markets, but, as I remember, there had to be lots of buyers and lots of sellers to be efficient.

I think the airplane market is anything but efficient. Way too few buyers and sellers, too few substitutes, and too much emotion on the parts of buyers and sellers ( in the non-corporate market).

I was the only one who even test flew the plane I bought in the 11 months it was on the market.
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Well, not really. If you recall microecon, all it takes for an efficient market is a willing buyer, a willing seller, and an unencumbered exchange medium. I would start the efficiency lecture by offering to buy one of the student text books. The retail price of the book back then was about $77. So I would offer ten bucks, then 25, then 40, and 50, then $75, and by 90 bucks I always had a willing seller. Ergo - a micro-economic efficient market exists. Now, if we didn't have an unencumbered exchange medium(USD) then it would make it more complex, but all it takes is a willing buyer and seller.

In the aviation world, we are a small market to be sure, but a few posts back we had someone who gave an AOPA article that quantifies trends in the airplane sales, so surely that is large enough to make up some bell shaped curves, and even some histograms related to market sales.
 
docmirror said:
Well, not really. If you recall microecon, all it takes for an efficient market is a willing buyer, a willing seller, and an unencumbered exchange medium. I would start the efficiency lecture by offering to buy one of the student text books. The retail price of the book back then was about $77. So I would offer ten bucks, then 25, then 40, and 50, then $75, and by 90 bucks I always had a willing seller. Ergo - a micro-economic efficient market exists. Now, if we didn't have an unencumbered exchange medium(USD) then it would make it more complex, but all it takes is a willing buyer and seller.

In the aviation world, we are a small market to be sure, but a few posts back we had someone who gave an AOPA article that quantifies trends in the airplane sales, so surely that is large enough to make up some bell shaped curves, and even some histograms related to market sales.
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well put. And within that distribution it can be seen that some models consistently demand more money and sell quicker (for example S35 bo's and nearly any C-182) and some models don't move even at very low prices (example, vikings, bo's with beech props, C-337's). That doesn't make the low priced planes "undervalued" or a "bargain". If anything it means they are still overpriced if they still aren't selling.
 
docmirror said:
Well, not really. If you recall microecon, all it takes for an efficient market is a willing buyer, a willing seller, and an unencumbered exchange medium. I would start the efficiency lecture by offering to buy one of the student text books. The retail price of the book back then was about $77. So I would offer ten bucks, then 25, then 40, and 50, then $75, and by 90 bucks I always had a willing seller. Ergo - a micro-economic efficient market exists. Now, if we didn't have an unencumbered exchange medium(USD) then it would make it more complex, but all it takes is a willing buyer and seller.

In the aviation world, we are a small market to be sure, but a few posts back we had someone who gave an AOPA article that quantifies trends in the airplane sales, so surely that is large enough to make up some bell shaped curves, and even some histograms related to market sales.
Click to expand...


How is it an efficient market if you are paying $90 for a book that is $77 at retail?

That is a completely inefficient market.
 
JHW said:
That doesn't make the low priced planes "undervalued" or a "bargain". If anything it means they are still overpriced if they still aren't selling.
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You used "undervalued" and the OP and myself were using "underpriced". While there is surely a relationship between 'value' and 'price', I think there is enough of a context difference to point out the efficiency argument. I agree that some planes represent a good value, and a good price, but some planes represent a high price, but not really a good value. My example would be the C182, which I consider to be well overpriced, based on it's characteristics. It is the ubiquitous big brother to the 152 and 172, and I think there is a segment of the flying population who will buy a 182 without ever considering the faster Bo of similar vintage. Not having any hours in the 182, I've heard it flies like a truck, and gets about the same economy.
 
JHW said:
evidently you need to take his class
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I freely admitted that it was a long time since I sat in an undergrad Finance or Econ class.

But, in the markets I participate in real world, getting someone to pay me $90 for an item worth $77 is a completely inefficient market.

Do you think overpaying by 15% on a near-commodity item (generic textbook) is an efficient market transaction?
 
JoseCuervo said:
How is it an efficient market if you are paying $90 for a book that is $77 at retail?

That is a completely inefficient market.
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You are confusing price sensitivity to efficiency. Again, subtly different. It's simply an example. Maybe I wanted that specific book, maybe I would have gone up in 3 dollar increments. The point wasn't that there was more elasticity in the price, the point was that a willing buyer found a willing seller, at an unencumbered medium.

In this example only, you and I would agree that the buyer got a worse deal, and the seller got a better deal. Until I got the book, and found that there is an early signature in the flyleaf from Bill Gates. Then, my $90 might be worth several hundred, in which case the 'value' would be reversed.
 
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