2023 resale price speculation

[Nursemanit]

And just over a week after asking the question, the cheapest OKW has dropped below $90 and the cheapest SSR has dropped below $100. Things are moving faster than they were.

I have only seen auction listings that low.

 

[Epcot Forever Forever]

I have only seen auction listings that low.

I am ignoring auction listings because the prices are nonsense. Do you ever look at www.fidelityrealestate.com ?

 

[AnnaKristoff2013]

I wonder why fidelity has prices that are so much lower than the other major resale sites?

 

[SouthJersey]

Well,

here we are in December, and the board’s sponsor site has more contracts for sale than I can remember at any point since the early days of the pandemic. In fact, across the whole market, the number of contracts for sale has increased by like 25% in 2 months.

Asking prices are hitting lows we haven’t seen in 2 years. You can find OKW at $94, BRV and Saratoga barely above $100, even favorites like Beach Club in the $130s and Bay Lake and Poly in the $140s. And I don’t think I need to tell anyone what’s happened with VGC.

So what’s up?

Why is everyone selling their DVC contracts?

And I think maybe more to the point, why isn’t anyone buying them?

Is it the economy? But aren’t wages going up still? Is it that the government isn’t sending people 4-5 figure checks anymore? Is it peoples frustration with changes at WDW?

And perhaps most importantly, what happens in 2023? Do prices keep falling (and make no mistake, they are falling)? Or does something happen to turn things around?

1.) The macroeconomic landscape is the worst it has been - arguably ever. The state of things in place are lining up for a Lehman level event x10.

2.) People in ARMs are getting slaughtered and losing disposable income.

3.) Luxury sales, whether it be watches, vehicles, or things like a DVC, are finally falling off the cliff. I broker exotic vehicles and luxury watches, prices have peaked and are pulling back more aggressively with every week.

4.) Those DVC owners who want/need to buy a new home for whatever reasons, lost over $1,000/month just in buying power from the rate hikes.

5.) Consumer credit debt is at a historic high, with rate hikes pushing up their APRs.

6.) Have a DVC and you finally need a new vehicle? That $430 lease in 2020 is now a $850 lease. Where do you find the $420 from?

7.) Disney experience. People hate genie, people hate the food/drink downsizing, people hate the crowds, people hate the price hikes.

Rising wages aren't alleviating anything, they're just accelerating the rate of inflation. Sure, CPI data yesterday wasn't AS bad, but it's still bad.

Don't forget, the inventory ALWAYS surges from December - January as people want out before their dues are due.

 

[SouthJersey]

Agree with what everyone is saying except that I don't think current interest rates have anything to do with it since DVC and places like Monera have always had horrible financing options. Also no APs is a huge deal breaker for many DVC members.

It's not necessarily specific to the financing rates of DVC.
The fed remaining hawkish and the fact we're going to see sustained rate hikes throughout 2023 means everything gets more expensive. Your credit card APR rises, your ARM rises, the new car/lease you want rises, etc.
Unless your source of income is up ~15% on the last two years and in line to grow 7% a year, you're losing disposable income every few months. Eventually it's eating into your dues/disney/contract budget and you become a seller.

 

[SouthJersey]

I do wonder how much ROFR Disney will do moving forward. They’ve really raised the prices of the sold out resorts to the point where I am not sure they’re attractive purchases for people. A couple of them there’s zero ability to justify the direct purchase financially and anyone who claims otherwise needs to talk to a CPA. So Disney will be unlikely to ever ROFR those again, since they get a few dozen contracts per resort per year from deed surrenders (fools!) and foreclosures.

Disney will go hard on ROFR if the cheapest contracts begin selling or offers start getting too low.
The buildings are built, they'll absorb those contracts the moment the market signals that resale is eating significantly into their direct revenue.

I bought 400 points direct last month at VGF because the promotions at the time brought me down to $184/point. Best-case scenario resale was $160-$164 a point, assuming no ROFR at $160.
10% savings wasn't worth sacrificing the blue card or luxury of future resorts over the next 42 years. 10% also isn't hurting Disney because they're making revenue on that resale contract

We are in the process of trying to figure out if DVC is for us so trying to do all the research I can. We were initially going to buy 250 points to start so we could go twice a year, maybe split between two different resorts for the early reservation perk, but because of the no AP problem right now we are considering 150 points at one resort instead to go only once a year. We would buy that contract resale to save money and get our foot in the door. The other contract would have been direct with Disney.

Can you please tell me what "staffed-up kiosks", "G+ at 7 am", "neglect of blue card", "and treating a blue card like a PSL" mean?

I feel like maybe DVC isn't quite as good a deal as it seemed to me initially, so unsure of what to do now.

Edited to add that we would not need financing, so interest rates aren't a problem.

It depends how you vacation.
For instance, it was a no-brainer for us.

• We go annually in October-Dec and stay at the Grand Floridian with two deluxe studios ($13,326).
• In ten years, we're paying $133,260 for rooms (or best-case scenario $100,000 if there's always a 25% room discount on deluxe resorts).
• With DVC and 400 points for $74,000 + dues (use the current $2,800) that's $102,000. I break even as of year 10 assuming there's always a 25% out of pocket discount for deluxe, 7.5 years if those room discounts stopped. That's also not including the residual 84 points I have left to rent out at $1,700 to go toward dues to reach an earlier break even.

 

[Epcot Forever Forever]

Disney will go hard on ROFR if the cheapest contracts begin selling or offers start getting too low.
The buildings are built, they'll absorb those contracts the moment the market signals that resale is eating significantly into their direct revenue.

To be clear, this is exactly the opposite of how they handled the drops in prices in 2009-11 and summer 2020. They suspended ROFR entirely and let absolute nonsense firesales go through. Some posters on this board bought at unimaginably low prices. The 2020 posts are still in the ROFR threads, and you can check the county’s sales database yourself to verify (I did).

 

[Epcot Forever Forever]

I wonder why fidelity has prices that are so much lower than the other major resale sites?

They have historically been where Disney refers people who want to sell their contracts; I wonder if they get a less educated seller as a result?

Also they charge more in buyer fees than some other sites so make sure you do all of the math before buying.

 

[tom1944]

They have historically been where Disney refers people who want to sell their contracts; I wonder if they get a less educated seller as a result?

Also they charge more in buyer fees than some other sites so make sure you do all of the math before buying.

What buyers fees are those?

Title insurance and what else?

 

[gscott8075]

I don't see how you could have possibly broken even, unless you financed or bought direct sold out or something or only had you OKW for like two years. Buying resale, you would have made money on both of these transactions, if you held for any reasonable amount of time.

Buying now, well, different math. I don't see how any of this is sustainable.

OKW we owned for a couple of years and sold it to buy HHI. 'About broke even' - we were ahead - for tax purposes, you add capital reserve to the cost basis for computing cap gain/loss.

 

[Philsfan77]

Well,

here we are in December, and the board’s sponsor site has more contracts for sale than I can remember at any point since the early days of the pandemic. In fact, across the whole market, the number of contracts for sale has increased by like 25% in 2 months.

Asking prices are hitting lows we haven’t seen in 2 years. You can find OKW at $94, BRV and Saratoga barely above $100, even favorites like Beach Club in the $130s and Bay Lake and Poly in the $140s. And I don’t think I need to tell anyone what’s happened with VGC.

So what’s up?

Why is everyone selling their DVC contracts?

And I think maybe more to the point, why isn’t anyone buying them?

Is it the economy? But aren’t wages going up still? Is it that the government isn’t sending people 4-5 figure checks anymore? Is it peoples frustration with changes at WDW?

And perhaps most importantly, what happens in 2023? Do prices keep falling (and make no mistake, they are falling)? Or does something happen to turn things around?

When we were looking back in 2017 to buy...a friend of ours who was a DVC owner, suggested checking out the site sponsor listings. At the time I remember looking at/seeing close to 800 resale listings available on the site. I haven't been in the market for a contract, so haven't been checking resale listings, but I did today after seeing this post, and right now there are under 700 available listings there. Perhaps it's really none of the above you mentioned, but rather just a return to what was normal pre-covid, since everything that happened during covid was sort of an anomally where listings dropped down to around 300 available and were selling like hot cakes. With that in mind, and normal supply/demand issues prices should keep coming down IMO from what were the covid highs.

 

[AstroBlasters]

1.) The macroeconomic landscape is the worst it has been - arguably ever. The state of things in place are lining up for a Lehman level event x10.

2.) People in ARMs are getting slaughtered and losing disposable income.

3.) Luxury sales, whether it be watches, vehicles, or things like a DVC, are finally falling off the cliff. I broker exotic vehicles and luxury watches, prices have peaked and are pulling back more aggressively with every week.

4.) Those DVC owners who want/need to buy a new home for whatever reasons, lost over $1,000/month just in buying power from the rate hikes.

5.) Consumer credit debt is at a historic high, with rate hikes pushing up their APRs.

6.) Have a DVC and you finally need a new vehicle? That $430 lease in 2020 is now a $850 lease. Where do you find the $420 from?

7.) Disney experience. People hate genie, people hate the food/drink downsizing, people hate the crowds, people hate the price hikes.

Rising wages aren't alleviating anything, they're just accelerating the rate of inflation. Sure, CPI data yesterday wasn't AS bad, but it's still bad.

Don't forget, the inventory ALWAYS surges from December - January as people want out before their dues are due.

Worse than Lehman x 10? Sounds like your opinion is that a Great Depression is on the horizon.

 

[Sandisw]

To be clear, this is exactly the opposite of how they handled the drops in prices in 2009-11 and summer 2020. They suspended ROFR entirely and let absolute nonsense firesales go through. Some posters on this board bought at unimaginably low prices. The 2020 posts are still in the ROFR threads, and you can check the county’s sales database yourself to verify (I did).

I got BWV at $53 point in 2012 and got SSR as low as $72/point in 2017.

 

[Nursemanit]

I wonder why fidelity has prices that are so much lower than the other major resale sites?

They charge the buyer a fee - so for smaller contracts you have to add a few dollars

They also let you list at your price and are more realistic about the market

 

[vdangelo239]

They charge the buyer a fee - so for smaller contracts you have to add a few dollars

They also let you list at your price and are more realistic about the market

Those buyer fees are sneaky. On a 50 point contract you have a $225 "Admin Fee" that immediately adds $4.50 to the purchase price agreed to with the buyer. So if you get a small point contract that's 50 points you need to factor that in.

 

[Sandisw]

Those buyer fees are sneaky. On a 50 point contract you have a $225 "Admin Fee" that immediately adds $4.50 to the purchase price agreed to with the buyer. So if you get a small point contract that's 50 points you need to factor that in.

True. There are buyers who also get the seller to pay the fee as well and that can make for some nice deals.

 

[Cyberc1978]

For instance, it was a no-brainer for us.

• We go annually in October-Dec and stay at the Grand Floridian with two deluxe studios ($13,326).
• In ten years, we're paying $133,260 for rooms (or best-case scenario $100,000 if there's always a 25% room discount on deluxe resorts).
• With DVC and 400 points for $74,000 + dues (use the current $2,800) that's $102,000. I break even as of year 10 assuming there's always a 25% out of pocket discount for deluxe, 7.5 years if those room discounts stopped. That's also not including the residual 84 points I have left to rent out at $1,700 to go toward dues to reach an earlier break even.

You can of course do your comparison however you like. Paying $13,326 for two studios is definitely a direct price. Had you rented instead and paid $25 pp which is high for VGF as most rent VGF cheaper, then you would pay 2 x $3,950 for a total of $7,900. Your breakeven would be pushed to 13 years. As dues always increase you are more likely to look at 14 or 15 years using this comparison.

Not saying that buying DVC is a bad idea it’s not. After the 14 or 15 years your VGF still hold value should you decide to sell.

 

[DonMacGregor]

What buyers fees are those?

Title insurance and what else?

A fee fee. They just charge it.

 

[DonMacGregor]

Worse than Lehman x 10? Sounds like your opinion is that a Great Depression is on the horizon.

And who in their right mind is in an ARM in 2022?

 

[RoseGold]

I wonder why fidelity has prices that are so much lower than the other major resale sites?

Fidelity is more realistic and doesn't post crazy expensive listings that no one is going to buy. Fidelity also doesn't negotiate as much in my experience.

I think it's fair to make an offer matching Fidelity elsewhere. Fidelity is not wrong about value.