I'm writing this as more of as sobering thought on my own accord, just to make sense of what's going on. Please don't take anything personal, I'd be fortunate to hear y'alls thoughts/ideas/and recommendations for going forward in these markets.

As many have noticed, the GA airplane market has taken a huge upside turn in the past 1 and 1/2 - 2 years. I think this upside turn can also be pretty well noticed in the stock and housing markets as well. I thought for sure that we'd see a stock market crash or recession during the first quarter of 2021, however I was completely wrong and we continued to see an almost 20% increase from February 2021 to September 2021. Ever since an unnamed CFI wrecked my first airplane purchased in early 2020 (during his first time taking it out), I've been staring at the airplane market like a fish in a bowl. I can't help but think that there will be a more opportune time to enter the market. However, I've been thinking that for quite some time now, waiting patiently. Over the past few weeks, I've noticed more planes beginning to enter the market. I can't be sure if this is due to a forthcoming market downturn, the fact that winter is approaching, or a combination of the two. It is worth mentioning that the stock market seems to have been stabilizing over the past month, possibly indicating a downturn as well.

I remember back to times from 2018-2019 where you could purchase a decent 170B with low time SMOH for $50-60k. After some deep web searches, I've found some posts from Barnstormer from that time in June of 2019, so that you know I'm not FOS with my numbers.


Using the US government inflation calculator we can check the inflation rate of $1 from June 2019 to August 2021. In which we receive that $1.00 in June of 2019 has the same buying power of $1.07 in August of 2021 (which would mean at 7% increase). Unfortunately, USD has no Cryptocurrency token burn type implementation, therefore we will continue to see inflation for USD just as we have in the past. 7% over 2.2 years is like ~3.2%/year, which isn't too awfully bad. It is too bad that "savings" account is only giving you less than or equal to 0.4% APY though.

The problem is more notable when we look at the Airplane, Stock, and probably housing markets as well. It's not unheard of to find these same 170B's now listed at $80-90k now (if at all). Just going from past top-end to now's low-end (i.e. 60k to 80k), we find a 33.33% increase of price. God forbid you end up buying one of these aircraft at 90k, the market tanks, and end up having to lose your ass on it at $60k after an unfortunate circumstance and realization that you need to let it go. This has been my thought all along, man just keep waiting and you'll get a better deal.

With GA aircrafts, particularly one's used for backcountry, there is quite a lot of risk involved. If these risks are thought of too lightly, then you'll surely be in for a mistake. If taken too heavily, then owning an aircraft may not be right for you. In these times, I ask to myself, "what's it worth?" Speaking not only of the monetary value, but the time and effort of working those long hard hours at work, away from family to make up the 33.33% increase. Most of the time, with airplanes, it does seem like you're going to lose money one way or another through flying time/loans/insurance/tie-down, slip, or hangar rentals/annuals/improvements/etc... however, I've most definitely seen people here in Alaska who've bought a plane in the last 2 years and then sold it for 30% more after only flying it for <20 hours. As we can see, this is not making aviation more accessible to the average person. Without a doubt, there are surely more people entering General Aviation, which is attributing to these price hikes. I do welcome all newcomers to GA, as I am a newcomer myself over the past 5 years. Although, it's very evident that this is not the only factor at play. Then there's the other side of the argument, what's it worth to NOT be able to fly? To me, like I'm sure it is to many other's here, flying is priceless. Although, I do believe in fiscal responsibility, and that's important in order to keep that dream of flying your own aircraft alive.

I must say, these different kit plane self-build options are looking a lot more romantic. If hangar space wasn't so completely unreasonable in Anchorage, I'd surely be building my own by now. These are great options and I love how they're helping bring new aircraft into the market. I can't help but to selfishly hope that we do receive some sort of market correction or downturn in the near future, but until then I'll be waiting patiently, saving up that aviation nest egg. I do try to get out and rent an airplane every now and again - to first and foremost ensure that I don't forget the blissful feeling of flying, the reason I'm saving the way I am, and to not lose sight of my true goal.

I hope everyone is well,

CompSciAndFly

In the early 70s, after a regular Army tour, I moved up slowly on a teacher salary and National Guard weekend warrior income. I bought ugly airplanes, insured them for what they would bring if pretty, and flew them a lot. $1340, $2500, $3500, $4500, $6500, $10,000. The last airplane I bought was a CallAir for $12,500 in 1994. I simply would not pay more for an airplane. Some of them quit on me, but most flew fine.

An airplane is a liability, not an asset. Buy an airplane because you want to fly it. It’ll cost money, possibly quite a bit.

Unless you’re going to work this proposed airplane, it is a toy.

You can either afford it, or not.

If you can afford it and really want it, find the best example you can afford, buy it and don’t look back.

In other words, you’re over thinking it.

MTV

Trying to time the market for a downturn is difficult. Money is flowing into hard assets which include the airplane market. GA airplanes are in scarce supply - There are only a few new piston planes being built now - all with high 6 digit plus price tags. This leaves the old fleet of GA airplanes which unfortunately due to accidents and deferred maintenance is leading to a shrinking supply. You might get lucky and time the market correctly during the next short term deflationary cycle. Could this happen in 2022 - maybe ? Ultimately the prices of just about everything are headed in one direction - upward. There is just too much monetary stimulus for the price to do anything but go up. I would try to find an airplane you like that it is good condition and keep it for the long-term not worrying if you mistime the market. There are still some decent values in the GA market - Maules, and Pacers still look relatively cheap. Higher AV gas prices could cool the GA market down short-term and something to watch. It is disheartening watching just about everything worth anything skyrocket in value. Housing costs being near unobtainable now in some regions. Irresponsible government policies (left and right) have put us in this position. Very sad.



Josh

Kit builds are expensive too. One good thing is that a quality kit build today has some value. 10 years ago not so much. We can thank in part the various kit manufacturers for upping their game in quality and parts supply for this.

Cost aside, don't build a kitplane if you have kids, a demanding job, a flying website, or any other time sinks in your life. It works if you have ample time, resources, and a good place to build. I have $80,000 worth of kit components sitting in various hangars, just waiting for me to do... something. If I think too hard about it, my anxiety pegs.

Most here know my story. Starting to think selling my 170B was the worst decision ever. I'm starting to feel like the reason I'm not flying is purely attributed to me.

I sold and bought houses within the last year. Making a lateral move only works if you've got some other tricks up your sleeve. My circumstances, and my tactics, were unconventional. If I was going to buy an airplane right now I'd be thinking outside box to birddog airplanes that aren't posted for sale. No barnstormers or anything public.

And yeah, you're right. Timing the market is tough. Are we high right now? Or is everything pushing even higher? Covid economics have defied logic and traditional predictors at every turn.

One place where you can't go wrong is holding out for a good specimen. Like MTV said.

Another factor I find curious is how this relates to number of pilots flying. In 2007 (Canada) there were approx 27,000 active PPL's. In 2020 there were 16,000. I'd assume the US has similar decline. I would have though this would have a similar effect on prices, but clearly not.

Prices are high for popular airplanes, and getting higher.
IMHO they're not gonna come down, except very temporarily,
and even then only in the event of a major financial event (like the 2008-09 "great recession").
Find one and buy it, now, before the prices go even higher.

And, there ya go…..you have our permission.

MTV

Find something decent you can afford and just do it. I sat on the sidelines for years, then did the club route before buying an “overpriced” 182 about 3 years ago. The only regret I have now is not buying one of the Pacers I was eyeing 10 years ago and flying then, or one of the 206’s I was eyeballing when I bought the 182. Now I look back with regret only on the years of flying I missed out on. This truly is a hobby, definitely not a financially wise thing for anyone to be doing at any pay grade.

I was going to wax all poetic and philisophical but:

CompSciAndFly wrote:Then there's the other side of the argument, what's it worth to NOT be able to fly? To me, like I'm sure it is to many other's here, flying is priceless.

There's your answer, I think.

noodles wrote:Another factor I find curious is how this relates to number of pilots flying. In 2007 (Canada) there were approx 27,000 active PPL's. In 2020 there were 16,000. I'd assume the US has similar decline. I would have though this would have a similar effect on prices, but clearly not.

I see you are in Red Deer. What are you flying? If you ever head north you need to stop in at my place.

Timing the economy is extremely difficult. Added to that is your own money. Either it’s in cash while you wait, and you are missing out on long term growth, or it’s in something that is also susceptible to that same downturn you are hoping for.
What I think you can do is be smart, have your cash ready to access within a short period of time and watch all of the sources daily. Search Craigslist across the country, TAP, Barnstormers etc, every morning with your coffee. Have your go-bag packed and be ready to call in sick and roll. If you need to borrow the money, you might be able to have that worked out in advance.
A very nice 182P just sold on a government auction site for around $100K a few days ago. I bought a very clean 182G (with a runout motor) one year ago for $40K. Neither of those deals are steals but they are good deals. I believe the key is to be ready, know what you are looking for and know how it compares to what’s available and then be extremely ready to make it happen today. I’m on number 14 in the last 20 years, have had a ton of fun with all of them and am cash positive over all.
Good luck!

I personally think that when the bubble bursts, and it will, that it will make 2008 look like Childs play. High Avgas prices and crushed housing market and general all around stagnant economy will see lots of airplanes up for sale. I expect the market to tank sometime in the next year or so.
If next year's elections don't go well, I suspect the economic downturn could last several years, remember the late 70's?

StillLearning wrote:I personally think that when the bubble bursts, and it will, that it will make 2008 look like Childs play. High Avgas prices and crushed housing market and general all around stagnant economy will see lots of airplanes up for sale. I expect the market to tank sometime in the next year or so.
If next year's elections don't go well, I suspect the economic downturn could last several years, remember the late 70's?

I actually hope StillLearning is right about a downturn. I think it would be healthy for the markets. I hate making the statement this time is different but this time may be different. The fed cannot afford for asset price deflation. They have too much cash and assets on their balance sheet. The statement " Inflate or die " is the principle they are obeying. I do believe there could be a window of opportunity but so hard to time. You may miss years of flying waiting to find a deal and in the end not save any significant amount of money. Zane's story is not unique. If you have the money - just spend it. Time is a precious commodity that cannot be repurchased. I bought my 180 in 2007. Pretty much right at the top of the market. Likely could have picked up the same airplane for 20-25K cheaper in 2009-10. I have zero regrets. The fact is - aviation is a super expensive hobby that will force most of us to work a few more years than intended and have less money when we die.


Josh

For what it's worth - I make a living based on market cycles and such. I watch the economy every single day, and I can say with a high degree of certainty that the economy will be cooling off over the next couple of years. Whether or not it's a major correction or not is to be seen, but the all the ingredients are there. Right now is the time to sell assets, not buy. But, that depends on what you define as an asset.

The stock market is way over-valued compared to GDP, labor is becoming a huge issue - the work ethic of the incoming workforce is abysmal, the middle east and Asia are becoming more tense, the US political climate is laughable, etc.

Just my .02