How long do "these markets" last?

Ray Jr

Ray Jr

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Prices seem very high right now for many popular vintage airplanes. When was the last time prices soared like this and how long did it last?
 
It will last until I build up the money to buy without a loan, then it will shoot up again.
 
Radar Contact said:
For most of us (@pigpenracing excluded) airplanes aren’t investments. Trying to time the market will result in you renting indefinitely. Bite the bullet, take the plunge and enjoy the freedom. :)
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I don't think most aircraft are investments, but not overpaying is worth considering. I mean, the housing bubble happened partly due to people overpaying versus the true market value. I don't think it's so much about "timing the market", but buying in what is clearly a seller's market just to get into ownership can be foolish. Trying to wait until the market bottoms out is just as foolish. Everyone has their own comfort level and estimation of the market. I'd not be purchasing an aircraft at this point in time unless the purchase had no material impact on my finances.
 
SoonerAviator said:
I don't think most aircraft are investments, but not overpaying is worth considering. I mean, the housing bubble happened partly due to people overpaying versus the true market value. I don't think it's so much about "timing the market", but buying in what is clearly a seller's market just to get into ownership can be foolish. Trying to wait until the market bottoms out is just as foolish. Everyone has their own comfort level and estimation of the market. I'd not be purchasing an aircraft at this point in time unless the purchase had no material impact on my finances.
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They keep making new houses. New airplanes, not so much. I am thinking that even with a recession, aircraft will hold up due to relative scarcity. Higher fuel prices might mean a shift to lower performance aircraft. But I gave up on buying individual stocks long ago as I always lost money, so don't listen to me when predicting future anything.
 
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Morgan3820 said:
They keep making new houses. New airplanes, not so much. I am thinking that even with a recession, aircraft will hold up due to relative scarcity. Higher fuel prices might mean a shift to lower performance aircraft. But I gave up on buying individual stocks long ago as I always lost money.
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Sure, but knowing what a 70's C172 sold for 3-4 years ago versus right now, it's pretty tough to see the value there. I mean, they are still making C172s, but the demand has skyrocketed. I can see some aircraft holding values (PA32, A36, etc) but a lot of it is just bull market kind of stuff. I'm still hoping for a bunch of baby boomers to wind up flooding the market with aircraft they've been hoarding, lol.
 
SoonerAviator said:
Sure, but knowing what a 70's C172 sold for 3-4 years ago versus right now, it's pretty tough to see the value there. I mean, they are still making C172s, but the demand has skyrocketed. I can see some aircraft holding values (PA32, A36, etc) but a lot of it is just bull market kind of stuff. I'm still hoping for a bunch of baby boomers to wind up flooding the market with aircraft they've been hoarding, lol.
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OOo, that's an interesting prospect. Just checked, BBers are all between 56 and 74.. I think there's a lot of flying yet to be done there! Good on em :)
 
SoonerAviator said:
I don't think most aircraft are investments, but not overpaying is worth considering. I mean, the housing bubble happened partly due to people overpaying versus the true market value. I don't think it's so much about "timing the market", but buying in what is clearly a seller's market just to get into ownership can be foolish. Trying to wait until the market bottoms out is just as foolish. Everyone has their own comfort level and estimation of the market. I'd not be purchasing an aircraft at this point in time unless the purchase had no material impact on my finances.
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Completely understand your side.

I’ve just been hearing by people here that it’s overvalued and going to pop any moment for the past 2-3 years. Values keep going up. I may be a minority on this but I wouldn’t wait to buy a plane trying to time (which is what waiting for values to drop is) the market. After your first few catch-up annuals and a few pieces of avionics, that X% you think you may have overpaid will seem like nothing. :)

Jokes aside, whose to say the general aviation market is going back down again? Especially for good traveling planes.
 
Ray Jr said:
Prices seem very high right now for many popular vintage airplanes. When was the last time prices soared like this and how long did it last?
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I'm about 24 months from being serious about buying so guessing 25-28 months. :eek:
 
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You have to recognize 100LL and interest rates are at 20 year lows. When the fuel price moves, and it will rather dramatically by next fall, followed by interest rates in 2022 the prices will correct.
 
Morgan3820 said:
They keep making new houses. New airplanes, not so much. I am thinking that even with a recession, aircraft will hold up due to relative scarcity. Higher fuel prices might mean a shift to lower performance aircraft. But I gave up on buying individual stocks long ago as I always lost money.
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With the low production numbers, I suspect the fleet is actually shrinking. Cessna built 126 172s, 33 182s and 26 206s last year. Every year some airplanes are destroyed in crashes, some are damaged beyond repair in storms, others are exported, and some are just left to rot. Unless a lot of someones start buying new airplanes, the bottom's not going to fall out of the used market.
 
FormerHangie said:
With the low production numbers, I suspect the fleet is actually shrinking. Cessna built 126 172s, 33 182s and 26 206s last year. Every year some airplanes are destroyed in crashes, some are damaged beyond repair in storms, others are exported, and some are just left to rot. Unless a lot of someones start buying new airplanes, the bottom's not going to fall out of the used market.
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I'm honestly not familiar with the numbers, but I'd be curious to know how many general aviation pilots are out there in younger ages? Completely agree that the pool of planes is probably shrinking, but is the demand by pilots (long term) going to be the same as it is now?
Clip4 said:
You have to recognize 100LL and interest rates are at 20 year lows. When the fuel price moves, and it will rather dramatically by next fall, followed by interest rates in 2022 the prices will correct.
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Exactly-Interest rates are probably the biggest reason prices have gone up. People can afford more, thus people increase their asking price. Housing market, planes, college, cars. People want the product, the people with the product will raise the price as high as people will pay.

I doubt interest rates will be significantly up in 2022(we shall see), but long term, yes rates will probably be higher than we've seen in a couple decades...make sure to refinance today :)
 
With the new secretary of transportation, I think I would wait to see what transpires.
 
Matthew K said:
I'm honestly not familiar with the numbers, but I'd be curious to know how many general aviation pilots are out there in younger ages? Completely agree that the pool of planes is probably shrinking, but is the demand by pilots (long term) going to be the same as it is now?...
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2019 data.......


upload_2020-12-17_19-38-11.png
 
Wow, that's really surprising. The < 40 crowd is quite a bit larger than other age groups. This bodes well for the future of aviation. Doesn't bode well for prices coming down though!
 
Clip4 said:
You have to recognize 100LL and interest rates are at 20 year lows. When the fuel price moves, and it will rather dramatically by next fall, followed by interest rates in 2022 the prices will correct.
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Do people finance personal airplanes? I wouldn't buy one I couldn't afford; insurance, maintenance, and taxes are enough of a yearly expense. It'd be different for a commercial operation where the plane could pay for itself.
 
Clip4 said:
You have to recognize 100LL and interest rates are at 20 year lows. When the fuel price moves, and it will rather dramatically by next fall, followed by interest rates in 2022 the prices will correct.
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They’ve been going up at a steep rate since Basic Med was approved.
 
Cogito said:
Do people finance personal airplanes? I wouldn't buy one I couldn't afford; insurance, maintenance, and taxes are enough of a yearly expense. It'd be different for a commercial operation where the plane could pay for itself.
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I’m sure some people do. I was taught to never finance toys
 
Ray Jr said:
Prices seem very high right now for many popular vintage airplanes. When was the last time prices soared like this and how long did it last?
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2003. Bubble popped circa 2009 (lagging indicator). And down it came. In 2010 you could buy a Lance or 182RG for well under 100K, almost 30point discounts from median 2005 listing. Comanches and BE35s going for a song. I've already posted before the delta_P of my Arrow between what the HELOC heroes who owned it before me bought it for (2005), and what I took it off their hands for in 2013.

Just like housing, bunch of [relatively] cash broke people perennially indexing their purchasing power to their ability to borrow. This is rank asset inflation by another name, while the .gov gaslights us with claims of "low aggregate" inflation via CPI metrics chicanery.

People want to "buy" at the top of that shell game? By all means, #YOLO. It's only a hobby after all. But the suggestion there's asset flooring, in this credit environment, is laughable. The fed dumps stupid levels of liquidity to recapitalize our overlords, and the proles borrow with abandon. Up and and down we go in the see saw. Yippee. We've had contributors on here who have come and gone with the sways of these credit waves. We just don't hear much about it cuz nobody is gonna stick around a hobby forum to be reminded how they lost their chariot when the credit spigot tanked. Nothing new under the sun.

Cogito said:
Do people finance personal airplanes? I wouldn't buy one I couldn't afford; insurance, maintenance, and taxes are enough of a yearly expense. It'd be different for a commercial operation where the plane could pay for itself.
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Are you non-facetiously asking that question? LOL. That's the lion's share of traveling aircraft transactions my man. It's the thing propping these prices. Financing is an American religion, if not an outright patriotic duty according to the Fed.

BL, as asset inflation runs away, the price point for cash vanishes. The inflationary pressure is credit driven, not cash driven (people aren't making more money inflation adjusted, to the real cost of living that is, not that joke CPI).

Lastly, that's also why you see a lot of price sensitivity being vocalized towards increasing recurring costs of much lesser value than the financed CAPEX, like insurance and non-engine repairs: the latter categories generally cannot be financed. To paraphrase Bill Engvall: Wanna pick out the financed millionaires in the crowd? There's your sign....
 
hindsight2020 said:
2003. Bubble popped circa 2009 (lagging indicator). And down it came. In 2010 you could buy a Lance or 182RG for well under 100K, almost 30point discounts from median 2005 listing. Comanches and BE35s going for a song. I've already posted before the delta_P of my Arrow between what the HELOC heroes who owned it before me bought it for (2005), and what I took it off their hands for in 2013.

Just like housing, bunch of [relatively] cash broke people perennially indexing their purchasing power to their ability to borrow. This is rank asset inflation by another name, while the .gov gaslights us with claims of "low aggregate" inflation via CPI metrics chicanery.

People want to "buy" at the top of that shell game? By all means, #YOLO. It's only a hobby after all. But the suggestion there's asset flooring, in this credit environment, is laughable. The fed dumps stupid levels of liquidity to recapitalize our overlords, and the proles borrow with abandon. Up and and down we go in the see saw. Yippee. We've had contributors on here who have come and gone with the sways of these credit waves. We just don't hear much about it cuz nobody is gonna stick around a hobby forum to be reminded how they lost their chariot when the credit spigot tanked. Nothing new under the sun.



Are you non-facetiously asking that question? LOL. That's the lion's share of traveling aircraft transactions my man. It's the thing propping these prices. Financing is an American religion, if not an outright patriotic duty according to the Fed.

BL, as asset inflation runs away, the price point for cash vanishes. The inflationary pressure is credit driven, not cash driven (people aren't making more money inflation adjusted, to the real cost of living that is, not that joke CPI).

Lastly, that's also why you see a lot of price sensitivity being vocalized towards increasing recurring costs of much lesser value than the financed CAPEX, like insurance and non-engine repairs: the latter categories generally cannot be financed. To paraphrase Bill Engvall: Wanna pick out the financed millionaires in the crowd? There's your sign....
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^^^^this

I've got my own reasons for financing. Would rather keep a million in cash on hand and finance a plane than dump 800k into a plane and only have 200k in cash(hypothetical scenario). However, this ONLY places when interests rates are reasonable.

Hindsight2020 has a big point. A lot of people that take advantage of cheap financing do not have cash on hand at all. So one blip in income and they default...
 
hindsight2020 said:
2003. Bubble popped circa 2009 (lagging indicator). And down it came. In 2010 you could buy a Lance or 182RG for well under 100K, almost 30point discounts from median 2005 listing. Comanches and BE35s going for a song. I've already posted before the delta_P of my Arrow between what the HELOC heroes who owned it before me bought it for (2005), and what I took it off their hands for in 2013.

Just like housing, bunch of [relatively] cash broke people perennially indexing their purchasing power to their ability to borrow. This is rank asset inflation by another name, while the .gov gaslights us with claims of "low aggregate" inflation via CPI metrics chicanery.

People want to "buy" at the top of that shell game? By all means, #YOLO. It's only a hobby after all. But the suggestion there's asset flooring, in this credit environment, is laughable. The fed dumps stupid levels of liquidity to recapitalize our overlords, and the proles borrow with abandon. Up and and down we go in the see saw. Yippee. We've had contributors on here who have come and gone with the sways of these credit waves. We just don't hear much about it cuz nobody is gonna stick around a hobby forum to be reminded how they lost their chariot when the credit spigot tanked. Nothing new under the sun.



Are you non-facetiously asking that question? LOL. That's the lion's share of traveling aircraft transactions my man. It's the thing propping these prices. Financing is an American religion, if not an outright patriotic duty according to the Fed.

BL, as asset inflation runs away, the price point for cash vanishes. The inflationary pressure is credit driven, not cash driven (people aren't making more money inflation adjusted, to the real cost of living that is, not that joke CPI).

Lastly, that's also why you see a lot of price sensitivity being vocalized towards increasing recurring costs of much lesser value than the financed CAPEX, like insurance and non-engine repairs: the latter categories generally cannot be financed. To paraphrase Bill Engvall: Wanna pick out the financed millionaires in the crowd? There's your sign....
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Very well put. Thanks

Matthew K said:
^^^^this

I've got my own reasons for financing. Would rather keep a million in cash on hand and finance a plane than dump 800k into a plane and only have 200k in cash(hypothetical scenario). However, this ONLY places when interests rates are reasonable.

Hindsight2020 has a big point. A lot of people that take advantage of cheap financing do not have cash on hand at all. So one blip in income and they default...
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I also completely agree with this. I don't want to tie up all that money in an airplane. Unless you've got like 10 times or more assets else ware and the cost of the plane doesn't hit your radar. 2 or 3 percent interest isn't hard to make in returns especially over the long term. I think borrowing money that you don't need to borrow is fine.
 
@hindsight2020 is using his hindsight lol. He’s spot on. I’ve owned several planes over the past 25 years, and as it has in the past, the price bubbles will again burst and burst hard. Along with planes will go boats, vacation homes, and other excesses. I’m sitting on cash at the moment, patiently waiting...I’m planning to upgrade my plane (always better to upgrade on a downturn, or downgrade when things are up), and buy the vacation home I should have bought in 2014.
 
FormerHangie said:
The only caveat I would add here is to not read too much into that student pilot figure, because student pilot certs don't expire any more, so the total just keeps building. Probably a better indicator is the number of orginal private certs for the year.
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True. They are also the largest commercial 1 holders. So that's something. Not that young working pilots are buying personal airplanes left and right. They will almost certainly buy them later in life
 
hindsight2020 said:
Just like housing, bunch of [relatively] cash broke people perennially indexing their purchasing power to their ability to borrow.
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Still happens. Good friend got a big promotion into a new position at his work. Soon after he has a brand new pickup, she has a brand new SUV, the old paid for 19ft boat is replaced with a shiny new 26ft boat, and an in ground pool appears in the back yard.

A year and a half later his position was cut, an early casualty of covid. And, they’re in the hurt locker as they can’t pay the notes on all the stuff. Yup, all that was financed. I feel bad for them, but not the wisest of choices.
 
Bill said:
Still happens. Good friend got a big promotion into a new position at his work. Soon after he has a brand new pickup, she has a brand new SUV, the old paid for 19ft boat is replaced with a shiny new 26ft boat, and an in ground pool appears in the back yard.

A year and a half later his position was cut, an early casualty of covid. And, they’re in the hurt locker as they can’t pay the notes on all the stuff. Yup, all that was financed. I feel bad for them, but not the wisest of choices.
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A good example of exactly what not to do.

Pains me to think the depreciation incurred on all those "assets"...spend years making payments and when your forced to sell it. There's nothing left after paying off the note.

As far as the pool, would be interesting to see someone repo an in ground pool :D
 
I'm not buying right now, more reasons than just the price. But a drop is inevitable, just when. Using cheap money instead of your cash, may be smart. Over extending is NEVER smart.
When the price of fuel goes up, the price of planes goes down. The next thing on the radar is dramatically higher taxes on fossil fuels. that will kill jobs, hurt the people who use transportation to make their living, like a tradesman. And make avgas more expensive, as well as car gas. The price of planes will drop along with the price of fuel going up. Want a good bet on an airplane, buy the fuel efficient models. So a Mooney (I'm not a fan) instead of a C-182.
And there is no vacation in owning a vacation home!
 
It would appear good and decent people on this board are wishing for an economic crash so they can get a lower price on buying a plane?? Surely not.....

In all seriousness - if you buy a plane you plan on holding for 10, 15 years, does it really matter when? You can't time the market - no one can. If you buy low and sell high, the plane you replace it with will be high as well. Buy high, sell low? The plane you replace it with will be lower as well. Besides, buying a plane - so I've been told - is a small part of the barrels of cash you'll be spending flying it anyway.
 
Oldmanb777 said:
I'm not buying right now, more reasons than just the price. But a drop is inevitable, just when. Using cheap money instead of your cash, may be smart. Over extending is NEVER smart.
When the price of fuel goes up, the price of planes goes down. The next thing on the radar is dramatically higher taxes on fossil fuels. that will kill jobs, hurt the people who use transportation to make their living, like a tradesman. And make avgas more expensive, as well as car gas. The price of planes will drop along with the price of fuel.
And there is no vacation in owning a vacation home!
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I agree with most of this. However, while there may be short term pain with an increase in cost of fossil fuels, it's really just a push to switch to a better alternative. Cost of the alternative will save everyone money(not to mention health) compared to fossil fuels. It's just a matter of balancing the speed of the shift so you don't shock the economy.

I'll call it now, I think 20,30 years from now. The gas car will be very much like GA planes are today. Relegated to a very small portion of the population that enjoy them as a hobby/sport.
 
WDD said:
It would appear good and decent people on this board are wishing for an economic crash so they can get a lower price on buying a plane?? Surely not.....

In all seriousness - if you buy a plane you plan on holding for 10, 15 years, does it really matter when? You can't time the market - no one can. If you buy low and sell high, the plane you replace it with will be high as well. Buy high, sell low? The plane you replace it with will be lower as well. Besides, buying a plane - so I've been told - is a small part of the barrels of cash you'll be spending flying it anyway.
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Good point. Know a lot of people who could make a lot of cash off selling their home right now. But what would they buy? All the other houses have gone up at the same rate. Assuming the same area.
 
Matthew K said:
Good point. Know a lot of people who could make a lot of cash off selling their home right now. But what would they buy? All the other houses have gone up at the same rate. Assuming the same area.
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Circumstances could be advantageous. We had the big damn house that I built to raise the family, 17 years we lived in it.

It had been 85% complete for 16 years. The dogs died, the kids left, we decided a year ago to downsize. We started working on finishing that last 15%, and were about 5% into that when friends of friends heard we were willing to sell, and made us an honest offer on the house, as is, private sale. Win - win.

With no certainty that we would stay in the area, we had no intention of buying, and found a nice, MUCH smaller rental property in a great location, for less than half our previous mortgage payment.

Sitting on a pile of cash now, just waiting, although the less than 1% money market rate makes me wince.
 
Clip4 said:
You have to recognize 100LL and interest rates are at 20 year lows. When the fuel price moves, and it will rather dramatically by next fall, followed by interest rates in 2022 the prices will correct.
Click to expand...

Not to get (too) political, but I’m guessing that the 100LL debate will shortly come raging back to life... if you know what I mean... and that could ultimately have disastrous consequences for a lot of things - fuel prices, fuel availability, aircraft values, etc.

For what it’s worth, I don’t see the market holding long term. The pilot population is just too small, and it’s shrinking. Values are up because the stock market is up, interest rates are down, and Covid has left a lot of people looking for something to do, and for a moment, GA travel had a relative increase in attractiveness compared to commercial travel. I think that will mostly go away after the vaccine is in wide circulation and we get back to a semblance of normal. I don’t think this next administration is going to be friendly to GA either just in general, especially if it doesn’t burn kerosene.
 
Matthew K said:
^^^^this

I've got my own reasons for financing. Would rather keep a million in cash on hand and finance a plane than dump 800k into a plane and only have 200k in cash(hypothetical scenario). However, this ONLY places when interests rates are reasonable.

Hindsight2020 has a big point. A lot of people that take advantage of cheap financing do not have cash on hand at all. So one blip in income and they default...
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And that blip is when prices dip. I look at everything as an investment. A new car is an investment. One you know you're going to lose on. A house can go either way. I wouldnt want to buy a house right now. I waited until 2012. Now it's worth 2.5 times what I paid with a propety tax bill to go with it. I'm in a unique situation where I have free access to a Cherokee Six. So I can wait for the right deal. As always, I'm unopposed to putting some sweat equity in. Am I looking to make money? Not particularly. But Im certainly not going to buy something for the current market premiums that needs paint and is at tbo.

It's actually partly why I'm considering EAB as a viable option.
 
Its a good time to evaluate your hull coverage... Ive only owned my plane two years and upped it a fair amount more than I bought her for... between improvements I’ve made and the market, if i bent her up and they handed ,e what i paid for her Id be buying a project plane... flying but tired...

the hull increase changed the rate very little..
 
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