Time it takes for a brand new SLSA to depreciate down a lot?

[N918KT]

Hello all again, I have a question regarding SLSAs price.

How long would it take for an SLSA, brand new, say about $120,000 purchase price, to depreciate in price, down to the $20,000 price range when used for a while?

I'm just curious on when can we see used SLSAs the price of a used Cessna 150/152.

[FlyingForFun]

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[FastEddieB]

Hard to know.

That depreciation is hardly going to be straight line.

And as the cost of a new plane of the same type goes up, it can drag the price of older ones up as well, or at least slow down depreciation.

Historically, planes depreciate for a while, but then tend to bottom out and then appreciate, albeit in nominal, but not real, dollars.

I don't think a $120k Light Sport will ever depreciate to $20k.

Look at those Cessna 150's. In the mid 70's they sold for about $10k new. They never sold for 10% of that, having bottomed out in the $3k or $4k range before beginning the inexorable climb in price to where they are today.

[drseti]

Remember that a goodly percentage of what we call "depreciation" is actually reduction in value due to wear of life-limited components. Take FFF's depreciation table as an example. If the engine is not replaced during that 17 year example, it will be completey run out at the bottom of the list. By then, it probably will be worth only $20,000. But if it gets a new engine at TBO, that would essentially double its value overnight. So, do you want a cheap plane that's going to immediately set you back in repairs equal to the purchase price, or one that costs twice as much and has a new engine?

[Jim Stewart]

The CTSW that I paid $97k for in 2006 is still worth $75k. So you have a pretty long weight. The engine alone is probably worth $12k-$15k. If you want an airplane for $20k, you're better off building yourself a Sonex or something similar.

[FlyingForFun]

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[N918KT]

Thanks for the responses everyone!

I had no idea that the price would actually go up in some cases over time. I thought they would drop and at a certain point, reach its lowest depreciated value.

I think the first Evektor Sportstar came out in 2005 or $85,000 and I think used Sportstars are nowhere in the $100K price range. I think they must be around $60,000 to $70,000 last time I checked.

[N918KT]

Look at those Cessna 150's. In the mid 70's they sold for about $10k new. They never sold for 10% of that, having bottomed out in the $3k or $4k range before beginning the inexorable climb in price to where they are today.

I thought the price of a 150 rose up because of inflation.

[FlyingForFun]

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[drseti]

I paid $20,000 for my first house.

I paid $15,250 for mine, when I got out of the Air Force in 1969 (in what was just starting to become Silicon Valley). A decade later, I paid $16,000 for my Beechcraft. During that decade, my salary went up from $8,000 to $20,000 a year. But, now we're both starting to sound like old farts, FFF.

[FlyingForFun]

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[FlyingForFun]

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[FastEddieB]

I had no idea that the price would actually go up in some cases over time. I thought they would drop and at a certain point, reach its lowest depreciated value.

I bought a 1976 Tiger for $32k after Hurricane Andrew in 1992.

Sold it for over $60k in 2003 to buy my Cirrus SR22 demo.

I had put almost $20k into a new panel and other improvements, and those times are not these times, but it can and does happen.

I think my Sky Arrow might be worth close to what I paid for it in 2007 ($75.5k) Why? Well, new ones are approaching $100k, so a well cared for used example can be seen as a bargain in comparison. With a new CT at or near $160k, think of the effect on the used market - for many $160k is nosebleed territory and a used one at $100k or $120k starts to look like a bargain - irrespective of the initial purchase price.

[drseti]

As previously mentioned, I paid $16k for my Beech in 1980. It was nine years old, with 1440 hours on it. Over the next two years, I put another $25k in it for avionics, paint, and interior. Then, in around 1987, it got a new engine at $14k. In the 1990s I upgraded it to STOL, with droop wingtips, 3-bladed prop, Cleveland wheels and brakes, etc., all to the tune of about $13k. In the current century, I added $47k in top-of-the-line avionics, custom leather interior, etc. So, my total investment was about $115k. At the top of the market, it was then worth maybe $100k resale value. You never get back everything you put into an airplane (but I was getting a lot of use out of it).

And then, the economy collapsed. When I finally sold it four years ago, values had dropped by more than half. I got $45k trade-in on my SportStar. So, yes, somebody got a really good deal on a well equipped, gently used Beechcraft!

Not sure if any of this is relevant to LSAs. By the time they're 40 years old and totally refurbished (or flown into total decay), they could be worth anything, or nothing.

[Helen]

Easy. Just look at an amortization calculator for an average aircraft loan. If the plane flies a lot, the owner will be upside-down in no time and selling the plane for whatever is left on the note.

Helen