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-   -   Resale market cooling down? (http://www.disboards.com/showthread.php?t=3194225)

JustTinking 11-02-2013 11:01 AM

Resale market cooling down?
 
I've noticed on the broker sites, that properties that were flying off the shelves 3 months ago are now starting to sit for a while. Stripped contracts in particular are not moving quickly at all, some have been out there for 60 days or longer. Saw a couple were pulled. Inventory seems to be building and prices are starting, just starting, to inch downwards. I even see some small contracts, 50 pointers, not selling.

Dare I say it?? Are we moving towards a market more friendly to buyers? :yay::yay::cool1::cool1:

Silver19 11-02-2013 11:53 AM

I think so. I watch the BWV listings daily and there is a surplus. On the other hand I've made four offers in the 70's and only one has been accepted. So the sellers are not showing me any desperation.

Nabas 11-02-2013 12:41 PM

The resale market is definitely cooling down. Available inventories are way up compared to the summer and many brokers are starting to slowly lower asking prices.

It's not unusual; we are getting into the slow season. Still, this spring and summer saw some crazy activity.

Any real estate tends to be highly speculative. DVC is no different.

It will be interesting to watch trends to see if we are in the new norm or if the market will swing down further. Was this year's run-up a return to normalcy or just a bubble?

OKW Lover 11-02-2013 01:03 PM

The PP's comments make me wonder if this is an actual long-term trend or just reflective of a regular seasonal change.

JustTinking 11-02-2013 05:17 PM

Quote:

Originally Posted by OKW Lover (Post 49983668)
The PP's comments make me wonder if this is an actual long-term trend or just reflective of a regular seasonal change.

That's a great question. I haven't been watching it long enough to know...anyone else with more experience care to weigh in?

e46m3 11-02-2013 09:59 PM

It's definitely cooled off.

Minniesgal 11-03-2013 01:26 AM

I'm not sure comparing to the summer is a valid comparison. I think people's minds are on other things at this time of year. A better evaluation would be to compare with this time last year. I was looking for VCG this time last year and I had a quick look and seems to be inventory is still lower, prices may well be heading down but possibly not back to where they were a year ago.

bookwormde 11-03-2013 06:19 AM

cooling off compared to 3 months ago yes

compared to a year ago no it is much higher

Dean 11-03-2013 07:00 AM

Quote:

Originally Posted by bookwormde (Post 49988340)
cooling off compared to 3 months ago yes

compared to a year ago no if is much higher

My opinion is that the GF buzz was largely responsible for the increased activity and prices. I expect them to cool off a little then go back up with the Poly. After that they should cool off again back to where one would have expected them to be with the passage of time and before the increases in the last year or so. Of course other changes could affect this as well such as any additional restrictions on resale points or other programs such as possible extension offers.

Nabas 11-03-2013 10:04 AM

During the 2010 - 2012 period, DVC prices were down significantly.

No doubt, the economy played a factor but it also could have been because Disney flooded the market with direct-sale DVCs. BLT, SSR, and AKV more than doubled the number of DVC rooms at WDW in just a few years.

In any industry, a large increase in new inventory affects secondary markets. By 2011, many of the impulse buyers at the new resorts (timeshares tend to be impulse purchases) likely were selling, increasing available resale inventory and bringing resale prices down.

With AKV expected to sell out early in 2014, both VGF and the Poly being relatively small DVCs, and a large percentage of impulse buyers having already sold their DVC interests, there should be no great influx of properties on the resale market going forward.

Inventories at the classic DVC resorts are climbing but this might be the usual seasonal influx caused by a desire by owners to avoid paying next year's maintenance fees along with less interest among buyers due to the end of the traditional vacation season. (Right now, many potential buyers don't have vacations on their minds.)

It will be interesting if the DVC resale market retains its gains from earlier this year or declines further. Still, I don't think we'll see a return to 2011-2012 prices unless something drastic happens.

Dean 11-03-2013 10:06 AM

Quote:

Originally Posted by Nabas (Post 49989713)
It will be interesting if the DVC resale market retains its gains from earlier this year or declines further. Still, I don't think we'll see a return to 2011-2012 prices unless something drastic happens.

I predict $40 SSR contracts passing ROFR by Jan, 2017.

Nabas 11-03-2013 10:55 AM

Quote:

Originally Posted by Dean (Post 49989732)
I predict $40 SSR contracts passing ROFR by Jan, 2017.

Wow, with SSR resales selling for an average $68/point in August, that would be something if it happens.

SSR is by far the largest WDW DVC resort yet remains relatively popular because of its low resale price and annual MF.

Because WDW's Cash Room Only (CRO) are so expensive, there's only so low DVCs can go.

Long-term, DVC membership should continue to retain some value as long as WDW maintains its current pricing structure at the onsite resorts. I'll use an example.

Historically, DVC Maintenance Fees (MF) and CROs from Disney have been increasing by about 3% per annum.

2013 room rates for a CRO at the Beach Club in early July (summer vacation season) were $448/night (including tax). With an annual increase of 3%, this might be $602/night in 2023 or $4214/week. Even with a 30% discount (not guaranteed, especially for the more popular times of the year), this comes out to $2950/week.

2013 MF at SSR were $4.81/point. In 10 years, this might be $6.46/point. It takes 134 points to stay in a BCV Studio for one week in July, or $866/week in 2023 MF. In 10 years, difference between renting and using DVC points might be about $2084 ($2950 – $866) per year. (It seems to me SSR members love to boast how they always are able to book elsewhere. :))

Let’s assume a person wants to commit to a WDW vacation for only 5 years, a pessimistic duration given DVC's current pricing structure, and then just throw away their DVC membership, which is unrealistic. Theoretically, this person would be willing to pay up to $10,420 ($2084/yr X 5 yrs) for a 134-point DVC membership at SSR. Beyond the ancillary benefits of DVC membership, let’s assume they need a real financial incentive to purchase a DVC and to take into account other closing costs, so they’d only be willing to pay $8000 for the actual points. At 134 points, this comes out to $60/pt ($8000 / 134) in 2023.

As long as Disney does a competent job of maintaining demand for WDW and doesn't drastically change the way it prices its onsite resorts, there will always be a percentage of the population that will view DVC as a viable economic option.

P.S. Hopefully, I got the math right! :)

Dean 11-03-2013 11:17 AM

Quote:

Originally Posted by Nabas (Post 49990099)
Wow, with SSR resales selling for an average $68/point in August, that would be something if it happens.

SSR is by far the largest WDW DVC resort yet remains relatively popular because of its low resale price and annual MF.

Because WDW's Cash Room Only (CRO) are so expensive, there's only so low DVCs can go.

Long-term, DVC membership should continue to retain some value as long as WDW maintains its current pricing structure at the onsite resorts. I'll use an example.

Historically, DVC Maintenance Fees (MF) and CROs from Disney have been increasing by about 3% per annum.

2013 room rates for a CRO at the Beach Club in early July (summer vacation season) were $448/night (including tax). With an annual increase of 3%, this might be $602/night in 2023 or $4214/week. Even with a 30% discount (not guaranteed, especially for the more popular times of the year), this comes out to $2950/week.

2013 MF at SSR were $4.81/point. In 10 years, this might be $6.46/point. It takes 134 points to stay in a BCV Studio for one week in July, or $866/week in 2023 MF. In 10 years, difference between renting and using DVC points might be about $2084 ($2950 – $866) per year. (It seems to me SSR members love to boast how they always are able to book elsewhere. :))

Let’s assume a person wants to commit to a WDW vacation for only 5 years, a pessimistic duration given DVC's current pricing structure, and then just throw away their DVC membership, which is unrealistic. Theoretically, this person would be willing to pay up to $10,420 ($2084/yr X 5 yrs) for a 134-point DVC membership at SSR. Beyond the ancillary benefits of DVC membership, let’s assume they need a real financial incentive to purchase a DVC and to take into account other closing costs, so they’d only be willing to pay $8000 for the actual points. At 134 points, this comes out to $60/pt ($8000 / 134) in 2023.

As long as Disney does a competent job of maintaining demand for WDW and doesn't drastically change the way it prices its onsite resorts, there will always be a percentage of the population that will view DVC as a viable economic option.

P.S. Hopefully, I got the math right! :)

As I said before, I think where we are right now is inflated. SSR was close to $50 pp before the increase. I'm using SSR as a reference point, not singling it out. I think what you describe is the best case scenario for value retention. We'll see.

Nabas 11-03-2013 11:26 AM

Quote:

Originally Posted by Dean (Post 49990246)
As I said before, I think where we are right now is inflated. SSR was close to $50 pp before the increase. I'm using SSR as a reference point, not singling it out. I think what you describe is the best case scenario for value retention. We'll see.

Just remember that my example does not take into account inflation. In inflation adjusted dollars, the $60/point at SSR in 2023 might be closer to $45-48/point today.

I don't think we are that far apart, only that in terms of absolute dollars, DVC should retain value.

I am suggesting that when predicting a price many years into the future, inflation needs to be considered.

mmdisneylover 11-03-2013 02:25 PM

Quote:

Originally Posted by JustTinking (Post 49982934)
I've noticed on the broker sites, that properties that were flying off the shelves 3 months ago are now starting to sit for a while. Stripped contracts in particular are not moving quickly at all, some have been out there for 60 days or longer. Saw a couple were pulled. Inventory seems to be building and prices are starting, just starting, to inch downwards. I even see some small contracts, 50 pointers, not selling. Dare I say it?? Are we moving towards a market more friendly to buyers? :yay::yay::cool1::cool1:

i was just looking yesterday and my question is why have the prices went so high? I wouldn't pay that much for resale. Love dvc but the resale prices are to high I will wait it out.


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