We hope you find our Cirrus pre-owned market overview useful. As we approach the midpoint of the 4th quarter airplane buying “busy season,” it’s always a great time to take stock of how the Cirrus market is holding up and share a few market insights from our perspective as the World’s Largest Cirrus Airplane Brokerage.
For those with short attention spans or better things to do, the highlights are: prices continue to fall, transaction volume is robust, interest rates haven’t hurt demand (much), and many listings are simply going to die on the vine. For those willing to suffer the details…
Without a doubt, the most consistent feedback that we’ve heard throughout 2023 is that the Cirrus market must be just about to crash, because there’s so much inventory available (approximately 340 SR2x, as of this writing). Granted, this inventory level is an all-time high on an absolute basis, but it represents roughly 5% of the total North-American Cirrus fleet, a value that is historically considered a balanced market. So what’s really going on in the Cirrus market? Here’s what we’re seeing:
- Prices are declining. While it’s absolutely true that closing prices have adjusted downward 10-20% since their pandemic highs, so far this market correction feels much more like a “soft landing” than a “crash.” Price levels are generally still above where they were in 2019, with overall inflation and continued strong factory new airplane backlog conspiring to keep depreciation in check.
- Transaction volumes are still very high. Look at the yellow line in the chart below. Every month in 2023 has seen higher sales volume than the corresponding month in 2022, and October 2023 may have been the all-time best month ever for pre-owned Cirrus sales, with 124 airplanes coming off the market. With pricing coming back into “normal” ranges, the buyers are out there!
- Interest rate hikes hurt demand, but not as much as we expected. Roughly 60% of our clients paid cash for their aircraft this year. In 2022, 49% did so. Interestingly, the number of clients using cash to purchase an aircraft in 2021 was 57%. So, yes, financing costs have impacted buyer behavior and likely driven some buyers out of the market, but not nearly to the extent we thought would be the case.
- The “real” marketplace is much smaller than it appears. Using the G6 Turbo segment as an example, there are currently ~80 units for sale, which is an all-time high. But the spread between the best- and worst-valued of these airplanes is currently a whopping $300,000, even after adjusting to account for their differences. What this means in practice is at the better-valued end of the spectrum there seems to be an active, healthy marketplace, but on the other end there are a lot of overpriced airplanes that appear to be languishing with pandemic-era premium pricing.
To further illustrate this point, 23 of the 25 best-valued airplanes in the G6 Turbo segment have made at least one price adjustment in the last 90 days (i.e., they are “competing”). Of the 25 worst-valued airplanes, only three have adjusted pricing over the same time period. Thus, we view a significant proportion of this market to be “non-transactable” at their current prices, and we expect these sellers will eventually be forced to either (a) get competitive, or (b) exit the marketplace.
Our overall takeaway is that while the signal-to-noise ratio in the current Cirrus marketplace is lower than normal, overall activity remains good, and there are no significant barriers for buyers and sellers who want to transact in the near term.
For a glimpse of the data we gather to understand the marketplace, check out our AeristaMetrics market data.
For a deeper dive into specific segments of the marketplace or an estimate of value on your aircraft, please reach out to us directly.