The light twin engine market seems to have a glimmer of life, but prices are still flat.
(PRWEB) June 23, 2011
“The light twin engine market seems to have a glimmer of life, but prices are still flat,” says Barron Thomas.
"In recent weeks, we've sold a 601P Pressurized Aerostar, a Pressurized 58P Baron, a Cessna 414, and a B-55 Baron, and we've got activity on our Cessna 320F, but there is no uptick in prices yet."
Actually, the low prices are driving this market.
Buyers that actually need a twin vs. "want" a twin, are seeing that opportunities exist, and they are acting upon the good airplanes at attractive prices.
There are some missions where a twin is essential, people needing full 6 seats plus luggage, and the usual "night/IFR" flight regimes. These buyers are doing the math: They can offset higher fuel costs by lower acquisition costs, and they buy.
The "twin enthusiast" buyer is almost non-existent right now.
There's no extra layer of this category of buyers to start raising prices. In today's circumstances, a rule of thumb is that an older twin is worth about the value of its engines and avionics.
That's a bargain, and serious twin-users recognize it.
People who fantasize about a twin, but can get by perfectly well with a 210 or Bonanza, are doing exactly that, which is another reason why prices are staying flat on twins. There just isn't enough demand, and there are more owners that can downsize into a high-performance single and still accomplish their mission, so more twins are entering the market, but they do indeed find buyers if priced right.
Fuel prices are really the culprit, along with higher maintenance costs of feeding and maintaining a more complex airplane, especially an older twin.
The classic vintage twins, that have been lovingly restored, will probably hold their value the best, next to the latest versions of each model. At today's prices, you can buy an older Aero Commander or Sky King vintage Cessna 310 for about the cost of its major renovation, and there will always be a market for the classic twins of the 1950's.
The late model Barons and 310R's, with major panel upgrades, that can continue to service a business owner/user will be among the first to recover in price.
Will there be a recovery in prices?
That's hard to predict, but probably yes, but in time. The economy will have to stabilize, lending start reasonably flowing again, and the price of gas will have to subside to a tolerable level, but yes, prices will likely recover on the good airplanes, but nobody knows when.
What should a seller do?
A seller should act on what makes the most sense now, given the facts of today.
Tomorrow is strictly a prediction.
Holding costs for a twin, while the owner waits for the market to "recover" are generally eaten up in the costs of annuals, A.D. notes, taxes, hangar, and just the miscellaneous costs of ownership, so there's rarely a "real" gain by waiting several years because you just spend the gain in price by the ownership overhead during your "waiting period".
Whether Buyer or Seller, you will need to act on today's circumstances as they apply logically to you.
No one can predict the future.
But if you need a twin, now is the time to ACT.