Price Analysis of Current DVC Resale Listings

[supersnoop]

I calculate it as an inflation-adjusted annuity where the interest rate equals the annual increase in hotel rates.

Due to pricing trends, we've seen some resorts appreciate above their initial purchase price, and the resale market seems to be influenced by the economy.

Ignoring those factors, I calculate that resorts will be worth 50% of their initial purchase price when they have just 8 years left on the contract. With 20 years left, they should still be worth 80% of the initial price. We should see the 2042 resorts starting to trend downward around 2027.

Of course, with the economy factored in, there's no telling what will happen.

 

[DVC Doctor]

My family was able to spend one night at BWV last week thanks to a friend who had some points that were going to expire. We've been talking back and forth about buying into DVC and we both love the location of BWV being so close to Epcot. It looks like all resale contracts are still in the $100pp range 8 months after the this comment was made. So, based on this, do you feel like these points should still be around $80pp?

I am the original poster and just checked some valuations.

The current price BWV appears to be $90-100 and at those levels, I would really want a contract with last years points banked, this year points unused, and obviously next year points unused.

My opinion is still that BWV is worth around $80pp and if you get a loaded contract for $100pp, the value of the 2x points is clearly worth $20, so your net price is around $80.

However, this is just my opinion and prices are reflective of market demand and this remains a popular resort.

Some concerns for me are the high annual dues and reduced time remaining of the RTU contract - especially when you compare BWV to SSR or BLT. But IF YOU REALLY WANT BWV, then it is a reasonable by at $100 if you get a loaded contract.

I calculate it as an inflation-adjusted annuity where the interest rate equals the annual increase in hotel rates.

Due to pricing trends, we've seen some resorts appreciate above their initial purchase price, and the resale market seems to be influenced by the economy.

Ignoring those factors, I calculate that resorts will be worth 50% of their initial purchase price when they have just 8 years left on the contract. With 20 years left, they should still be worth 80% of the initial price. We should see the 2042 resorts starting to trend downward around 2027.

Of course, with the economy factored in, there's no telling what will happen.

That is an interesting valuation method and I will point out a potential oversight.

Your estimation that the difference of 20 vs 8 years left is between 80% and 50% valuation - which is 30%. If you simply assume that the purchase price was $100, then the dollar difference is $30 over 12 years and that is $2.50 per point per year depreciation. However, the net savings of being a DVC owner over a renter is definitely more than $2.50 as the rental rates are $13pp and the annual dues is $6 (just using round numbers) to the savings is $7pp per year.

If you think of a $7 savings per year, then the 30% difference can be made up in a little over 4 years. Thus, it is possible that DVC contracts will still hold 70% valuations with 10 years left on the contracts.

Just buying DVC contracts that are approaching the end of the RTU can only be though of as a hedge on owning vs renting and that savings is about $7pp per year

Years left - $ or % valuation (of a sample $100pp contract)
1 - $7
2 - 14%
3 - $21
4 - 28%
5 - $35
6 - 42%
7 - $49
8 - 56%
9 - $63
10 - 70%
11 - $77
12 - 84%
13 - $92
14 - 99%

Therefore, it is my OPINION that most DVC contracts will hold value until about 15 years left on the RTU and then the price will drop about $7 per year. My estimations may be off by a yearly factor of $1-$2 or so, but I think the $7pp per year depreciation starting around 15 years left is pretty accurate based upon today's data.

 

[JHank44]

I am the original poster and just checked some valuations.

If you think of a $7 savings per year, then the 30% difference can be made up in a little over 4 years. Thus, it is possible that DVC contracts will still hold 70% valuations with 10 years left on the contracts.

Just buying DVC contracts that are approaching the end of the RTU can only be though of as a hedge on owning vs renting and that savings is about $7pp per year

Years left - $ or % valuation (of a sample $100pp contract)
1 - $7
2 - 14%
3 - $21
4 - 28%
5 - $35
6 - 42%
7 - $49
8 - 56%
9 - $63
10 - 70%
11 - $77
12 - 84%
13 - $92
14 - 99%

Therefore, it is my OPINION that most DVC contracts will hold value until about 15 years left on the RTU and then the price will drop about $7 per year. My estimations may be off by a yearly factor of $1-$2 or so, but I think the $7pp per year depreciation starting around 15 years left is pretty accurate based upon today's data.

The way you did it was the way I was describing but you explained it much better. In your example, you assume that the value of the contract is equal to the full value of the savings but I was arguing it would be something less. Your method is the theoretical full value but the actual price in the secondary market is based on supply/demand of contract (your value should be the ceiling). I'm not sure how much savings sellers will have to pass on to buyers to exit with so few remaining years. Maybe it is none but we'll have to wait to find out.

 

[CarolMN]

My theory is that resale value may not matter much as the end of the lease approaches - assuming that there are still brokers out there to make renting unneeded points easy. Yes, supply and demand matter & so does the remaining years on the lease, but isn't the real & ,ost important valuation of a contract actually based on the savings it gives over the cost of a Disney resort room?

IMO, annual fees will increase more slowly than Disney resort prices and thus a good rental market will still be there. Does it really matter if you get your "return" from rentals vs the sale of your contract? Not to me, LOL.

 

[DVC Doctor]

The way you did it was the way I was describing but you explained it much better. In your example, you assume that the value of the contract is equal to the full value of the savings but I was arguing it would be something less. Your method is the theoretical full value but the actual price in the secondary market is based on supply/demand of contract (your value should be the ceiling). I'm not sure how much savings sellers will have to pass on to buyers to exit with so few remaining years. Maybe it is none but we'll have to wait to find out.

Well, we are both right. Yes, my prices at $7pp per year for the last 10 years is pretty much a push when you compare renting points, but MANY people want to own over renting and this is a interesting option. Of course, speculator renters could make this valuation significantly higher, jut like people that don't plan well for the last two years may get stuck with unused points.

In reality, we are debating issues that are still at least 15 or so years away and anything can happen.

My theory is that resale value may not matter much as the end of the lease approaches - assuming that there are still brokers out there to make renting unneeded points easy. Yes, supply and demand matter & so does the remaining years on the lease, but isn't the real & ,ost important valuation of a contract actually based on the savings it gives over the cost of a Disney resort room?

IMO, annual fees will increase more slowly than Disney resort prices and thus a good rental market will still be there. Does it really matter if you get your "return" from rentals vs the sale of your contract? Not to me, LOL.

The only way to "stay alive" in your scenario, is to sell a contract with about 15 years of RTU left and buy a newer resort.

I sorta did that in the past with selling VWL to buy BLT and was happy with that decision as I made a profit on VWL at the time, locked in a low price for BLT, got lower annual dues with BLT than VWL, and gained another 15 or so RTU years over VWL.

 

[CarolMN]

The only way to "stay alive" in your scenario, is to sell a contract with about 15 years of RTU left and buy a newer resort.

LOL, DVC Doctor - I'll be 90 in 2042, so "staying alive" probably isn't going to involve buying a newer DVC resort at 75. But I suppose a girl can dream!

 

[WDWRook]

Am I crazy then to be on the verge of buying 60 Poly points at $171? First time buyer. Love the feel of the Poly, the layout, the convenience of the monorail, food options and pools for the kids. Love the Beach Club setup too especially the pool and proximity to Epcot, but BCV is a 2042 resort, and the DVC rooms are off to the corner vs Poly where they are mixed in. Poly is a 2066 resort. I fear that getting studios at Poly after it is sold out at 7 months would be tough to do. Also considering the member perks that you would not have buying only resale..

 

[Supplanter]

Am I crazy then to be on the verge of buying 60 Poly points at $171? First time buyer. Love the feel of the Poly, the layout, the convenience of the monorail, food options and pools for the kids. Love the Beach Club setup too especially the pool and proximity to Epcot, but BCV is a 2042 resort, and the DVC rooms are off to the corner vs Poly where they are mixed in. Poly is a 2066 resort. I fear that getting studios at Poly after it is sold out at 7 months would be tough to do. Also considering the member perks that you would not have buying only resale..

That's your call. I don't think it'll be that hard to book since its it'd only studios, but who knows. If that's the one you really want there's nothing wrong with it, Itd bug me if I paid double but many people are fine with that. It really just comes down to if that's the one you really want and if you want it now.

 

[suebeelin]

Am I crazy then to be on the verge of buying 60 Poly points at $171? First time buyer. Love the feel of the Poly, the layout, the convenience of the monorail, food options and pools for the kids. Love the Beach Club setup too especially the pool and proximity to Epcot, but BCV is a 2042 resort, and the DVC rooms are off to the corner vs Poly where they are mixed in. Poly is a 2066 resort. I fear that getting studios at Poly after it is sold out at 7 months would be tough to do. Also considering the member perks that you would not have buying only resale..

60 pts isn't off the charts and would make sense if it becomes a difficult resort to get into (like bcv).

So no, I don't think you're crazy. Just be sure you use those points for poly most of, if not all of, the time.

 

[DVC Doctor]

Am I crazy then to be on the verge of buying 60 Poly points at $171? First time buyer. Love the feel of the Poly, the layout, the convenience of the monorail, food options and pools for the kids. Love the Beach Club setup too especially the pool and proximity to Epcot, but BCV is a 2042 resort, and the DVC rooms are off to the corner vs Poly where they are mixed in. Poly is a 2066 resort. I fear that getting studios at Poly after it is sold out at 7 months would be tough to do. Also considering the member perks that you would not have buying only resale..

yes and no - as it depends on what type of room you want to book (ie studio lake) and the number of nights you want to stay

If you really only want Poly and will book this resort at 11 months, then it is not crazy- BUT you will be buying only 60 points - this is good for about 3 nights at the lowest season or 2 nights in high season. You can bank one year and borrow from the next and use 180 points every three years and stay for 6-9 nights every 3 years

For the same money, you can buy 140 or so SSR points resale and can book about 7 nights at the lowest season or 5 nights in high season. You can bank one year and borrow from the next and use 420 points every three years and stay in a Poly bungalow a few nights every 3 years

What I think is an issue is that you are only buying 60 points and that does not go far at Disney.

*** Now an alternative is to buy 60 Poly from Disney and add-on 100 points from SSR for a great hybrid ***

 

[WDWRook]

We ended up buying 60 Poly points, Sept UY. Going this Sept 11-16th. 60 Pts gets us our next three planned trips, then we either take a year off or consider adding that extra 100-150 points at AKV or SSR, or elsewhere.

Just can't decide our next trip date. Either May 2017, Sept 2017 or maybe try the first two weeks of Dec 2017. After 2017 our DS will be in 5th grade and pulling from school will be more complicated.

 

[DVC Doctor]

We ended up buying 60 Poly points, Sept UY. Going this Sept 11-16th. 60 Pts gets us our next three planned trips, then we either take a year off or consider adding that extra 100-150 points at AKV or SSR, or elsewhere.

Just can't decide our next trip date. Either May 2017, Sept 2017 or maybe try the first two weeks of Dec 2017. After 2017 our DS will be in 5th grade and pulling from school will be more complicated.

congrats

May 2017 will be 30% more points than September (i.e. 21 vs 16 points per night) and the first two week of December is a great time to visit and very low priced.

 

[ckb_nc]

I bought SSR last Feb at 72; just got back from 4 nights at GCH in a 2 bedroom. I could never get a rack room rate but figured it was at least 800 a night and likely over 1000. The DVC purchase right there helped pay itself off.

 

[Disney Dad ADL]

I bought SSR last Feb at 72; just got back from 4 nights at GCH in a 2 bedroom. I could never get a rack room rate but figured it was at least 800 a night and likely over 1000. The DVC purchase right there helped pay itself off.

It's difficult to say what VGC rack rates are because I don't think it's really possible to book a room with cash. At least, there's no mechanism to do this online. A 2 bedroom suite at GCH in September after Labor Day is $1127 per weeknight (would be Adventure season). In October it is $1405 per night, which is in Choice season. Next Monday, a 1 bedroom is about $1200, which would put a 2 bedroom around $1500 I think. You would also have to add tax, but you can often get a discount, so we can call that a wash. A VGC 2 bedroom would be cheaper than the GCH 2 bedroom (maybe 30%? Just a guess). So I think your figure of $800-$1000 seems about right.

 

[ckb_nc]

I think VGC is probably 20% off GCH rack room. We loved VGC is so many ways - it was great and real DVC treat. makes going to DL a real steal for a SSR DVC owner.

 

[DVC Doctor]

I think VGC is probably 20% off GCH rack room. We loved VGC is so many ways - it was great and real DVC treat. makes going to DL a real steal for a SSR DVC owner.

It is only a steal IF you can book a VGC room at 7 months with SSR points