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USA seller’s market: are we reaching Peak Cherokee

Peter wrote:

I see the arguments but I don’t see a long term increase in demand.

Perhaps not in Europe, but certainly in the US. Covid has made many people reluctant to use any form of public transport and the solution to this often enough is GA. Often enough to drive up prices of a good that’s not really in abundant supply. For example,I personally know a few people who regularly commute to their kids and do so by Cessna (or Piper, or Beech). This demand is here to stay.

OTOH – especially in context of the above scenario – there is the insurance cliff that kicks in between 70 and 80, depending on type. So yes, there will be reduced demand due to pilots aging out.

OTOH again, the supply of suitable simple non-exotic types is slowly decreasing, as old airframes with jurassic avionics are being retired, as the upgrade doesn’t make economic sense. This is a process of slow attrition and I really have no idea how long it will take to make a significant dent in supply. Especially bearing in mind that in many parts of the US you can have a dispatch rates in the 90s with only very basic instrumentation.

In sum I don’t see this market crashing any time soon. Some of the froth will go out, for sure, but I expect it to stabilize on a high level.

“More or less everything is underpinned by manufacturing, and that isn’t seeing any big increase in demand.”
In the UK, everything is underpinned by money creation. Houses are the magic expanders of the Government created money, through equity release. The crash will come, eventually.
With the news control, I’m not sure if it’ll be by 2022.

Maoraigh
EGPE, United Kingdom

Peter wrote:

Are we seeing a big increase in GA activity? No

So what are people doing with these £100k+ PA28s? It doesn’t add up.

What we see is a massive reduction in airframes for sale, at least in Europe. This can have many reasons: The most likely is that people don’t sell at the moment. Also: Even relatively benign damages such as gear up landings these days often end up as a total hull loss due to increased workmanship costs and too low hull loss insurances. So even easily repairable airframes get either scrapped or sold for parts.

The fact is: If you look at the platforms, there are massively less airframes to choose from. Those I am watching regularly have become a fraction of what they were: The Mooney offering on planecheck always was 2 pages, it is not even one now. Twin Comanches have increased massively in price and are few and scarce. Grummans exist in maybe one or two exemplars. Airplanes move much faster than they used to. And also more popular makes have much less actual airframes to choose from. Those which are cheap are usually projects or need massive (avionic) upgrades, those who are in mint condition and have contemporary avionics start to fully reflect the price of the upgrades.

What is sure, what used to be a buyers market where people could throw in agressively low offers is totally gone. I am aware of several sales in recent months which had me do a doubletake when I heard the prices: Amongst them a really nice F model Mooney which went well north of 100k when a few months or years ago, 30k would have been the maximum you could expect. It is quite a sellers market right now. For how long, nobody knows.

Peter wrote:

It’s like houses in the countryside. Currently they sell for any money.

Again, there is a very real shortage of purchasable homes in attractive positions. This is not an artificial bubble, it is simple fact that there are much more buyers than available properties. People here are musing about a crash for years, the opposite is true, not only due to the shortage but also due to very low interest rates. But what really is going to keep the prices up and possibly will get them up even higher is the acute shortage, particularly of one family homes. Why? Because at least here, each one family home with a sizable plot is bought by property sharks, destroyed and replaced with blocks of flats which sell for 1 million up again. A one family home here with 500 m2 plot will fetch between 2.5 and 3 million franks. If the plot is big enough, they can put 6 flats at 1 million each and they do it. Consequently, one family homes disappear fast, especcially older and larger ones.

If we were in the market today, with my income, buying a property would be out of the question in our area. Likewise, were we to sell, despite the fact that the value of our property has more than doubled since 2001, we can only sell if we were to move away. Even with the cash we’d make out of the property after mortage payback, we can not afford any property in our region. But for those who retire and move 50-60 km away into the less desirable locations for the Zurich workforce or go abroad, they can make a pretty penny right now.

As long as the shortage of affordable airframes and housing is acute, there is no indication of a fast decline.

LSZH(work) LSZF (GA base), Switzerland

Mooney_Driver wrote:

Amongst them a really nice F model Mooney which went well north of 100k when a few months or years ago, 30k would have been the maximum you could expect. It is quite a sellers market right now. For how long, nobody knows.

A 1991 J is for sale in the US for $270,000!

EIMH, Ireland

zuutroy wrote:

A 1991 J is for sale in the US for $270,000!

I think I saw that one, it is clearly an outlier

Some people will throw 1/2 million on a 100k aircraft, they will barely fly 1h in their toy (aircraft) and expect that to be back on resale, not everybody has the same passion for shinny toys

We visted a house that was priced 2 times more than the market, the owner was looking to sell it as it reminds him of his wife, he just bought a new one 5 min nearby, there was nothing wrong with his house: perfect in every aspect except the amount of unrecoverable money that was poured in…

PS: you can’t live in it unless your name is Christian Bale from American Psycho, he had one military tank in his garage with an extension for the canon, I think during our visit I have seen enough toys in that place than WW2 museums !

Last Edited by Ibra at 13 Jul 09:54
Paris/Essex, France/UK, United Kingdom

Maybe some of this going on too?

Administrator
Shoreham EGKA, United Kingdom

Normal used plane inventory is 5% of the fleet. Currently it’s 0.1% (sauce: ABS Web Live).

always learning
LO__, Austria

So… wait for a bit. Good things come to those who wait, as the old saying goes.

Administrator
Shoreham EGKA, United Kingdom

“often end up as a total hull loss due to increased workmanship costs and too low hull loss insurances. So even easily repairable airframes get either scrapped or sold for parts.”
Insurance write-offs are also bought to rebuild. While very good value for someone with signing authority, I knew someone who bought one and had it professionally re-built, for his own use.

Maoraigh
EGPE, United Kingdom

Cirrus recently issued a list of all airframes which they consider damaged beyond repair, and therefore, if brought back into the market, “counterfeit”.
It’s quite a long list of serial numbers…

Mainz (EDFZ) & Egelsbach (EDFE), Germany
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