At what point is it too much?

[DiznyMagic]

Hi guys,

I just want your input on this...At what point (if at any) do you think it may become too expensive to buy into DVC? I heard points will be up to 80.00 per point soon. We became members two years ago and are taking our first cruise with points but I know every time they call me to buy more I really struggle to figure out a way to do it (because ofcourse you always want more points). I guess there is always the option to stay with your original points.. but it sure is nice to have extra and not have to borrow!

 

[spiceycat]

with me it is more the place - I love the BC, so I will definitely add on there. However I don't care for the DI so no I won't there. After the BC it would have to be the Polyn or AKL to get another add on out of me. and I don't think that will happen.

 

[DVCDAVE]

There are several variables in determining at what point it becomes to expensive to buy in to DVC.

1) The cost of Hotel reservations, in particular where you would normally stay.

2) How long you stay.

3) How frequently you return to WDW.

4) How much time is remaining in the DVC program.

Obviously points 1-3 are unique to each person and you should do the math as it pertains to you. Most people feel they break even in 5 to 6 years. Some less, some slightly more.

 

[ZerasPride]

Hi there DiznyMagic, a fellow Clevelander here!

DH and I were discussing this very topic yesterday. He is no Disney fan and even though he agreed to our initial purchase, I don't think he would agree to any add-ons. I think I'd like a modest add on at either WLV or the BCV. Our home is Hilton Head and I love it there but I never thought it would be this nerve racking to wait for the 7 month window to open and have my plans sort of "on hold" until I know I can get something on property. I don't regret my purchase one bit and in some ways I'm glad we don't have more points than we do at Hilton Head. If I can (one day) convince him to add-on, it will definitely be on property. Of course, we'd have to add on enough to cover us for a 1 bedroom off season at WLV or BCV for at least 6 nights to satisfy me and that would take 155 points. With banking and borrowing that shouldn't be a problem every 3 years which is all I think we'd really need.

Anyway, I didn't mean to go on and on. Just wanted to say we have discussed this issue in depth at my house and DH feels we have enough and besides our budget really cannot take an add on at this point. I don't like the idea of always being in the "red" so to speak and always borrowing points but I guess that's exactly what we will be doing as I hope to book the cruise for our 10th anniversary next year. I guess I could have bigger problems so I'll stop whining. I am happy and truly grateful we have any points at our disposal but as you mentioned, it should would be nice to have lots more!

Lisa

 

[Granny]

This thread started with the phrase "at what point...."

I agree with everyone's assessment, but I can't see adding on points in another 10 years or so, unless the price starts dropping. I know 30 years of use is still a lot, but at some point (the thread starting phrase) it won't be worth it to add on.

Let's say resort rack rates keep rising. But let's also say that DVC keeps increasing the price. So in 10 years they are selling EPV or whatever, at $100 per point. That doesn't make sense to me, even though it may be cost justified by the resort rate increases.

"At some point", they will price themselves out of the premium people are willing to pay to stay on-site, especially with fewer use years each year.

 

[Orky15]

One more clevelander speaking here!!!!

I am EXTREMELY tempted to buy a BC add on before they go up in price... I know that I can't afford it though, and my fiance wouldn't approve of adding on before we even took our first DVC trip.

 

[DiznyMagic]

Wow great to hear that I am not the only one thinking along these lines. If you do your homework and are willing to stay at a moderate resort AND if you can only afford to go once a year to Disney (which the average family is lucky if they can do a once a year trip) then I agree, DVC will price themselves out. I am sure that they have had to think about this especially as the years progress and the club starts to near its end.
But for now I will also stop whinning and at this rate we may only afford to go every other year so that we can bank/borrow. I guess it could be worse!

Thanks for your input!

Great to hear from so many Clevelanders!!

 

[ZerasPride]

It is nice to know there are fellow Clevelanders out there in cyberland who love Disney as much as I do!

I truly don't think an add on is in our future no matter how attractive DVC makes the incentive for BCV. I know there is a thread on this board asking us to guess at what we think the incentive will be. For me to do an add-on, it would have to be a "no payment for 12 months" deal (lol!) or its probably not going to happen. Like you DiznyMagic and Orky15, we will have to allow the points we own to pacify us. I will say this, one of the reasons I felt purchasing in the 150-200 point range was sufficient was because I convinced myself we'd only be doing Disney trips every other year and that looks like it will have to be a possibilty or at the very least we'll be at our beloved Hilton Head every year (where we won't have to worry about park tix and such). Oh well, again, I'm just grateful we have any points and hope to be able to use them in good health for a long time to come!

Lisa

 

[IslandHap]

I think when we get to the "at what point" point, Disney will offically address the 2042 question.

It seems, IMHO, that this will probably occur in the next 5-12 years. If Villas @ Eagle Pines, or Disney's Downtown Villas (DI), begin a DVC II program, then Disney will have to address the 2042 question at that time.

I don't think Disney is too worried about raising the price per point so much that it hurts sales. Even if DVC units are not selling, CRO is renting them out.

 

[BeckyV]

ZerasPride- I own at BWV and VWL and have thought about buying more points at HH. I also thought about just trading points with someone who wants to go to WDW when I want to go to HH. That would eliminate waiting for the 7 month window.

 

[DiznEeyore]

Well, for us, they've hit that point with the next increase. Dh and I had lengthy discussions about doing future add-ons, and came to the conclusion over the weekend that whatever we own before the price goes up to $80 per point is what we will own for the run of DVC. Thus, we did a small add-on today, and are content. I suspect we are in the minority, tho!

 

[Eeyore2U]

I think as long as it is cheaper to add on then pay rack or discounted rates in the hotels it will be worth it. I keep asking DW to add on at BCV but she says our 150 @ BWV and 150 @VWL are enough. I want more!!!!

 

[Dean]

It will be a price vs quality vs length of time remaining calculation for anyone who should consider DVC anyway. Obviously there are those that DVC is not right for now at any reasonable price. For full price based on current situations, I'd say that anything less than 30 years starts to beg the question. There will be a market likely up until the last 3-4 years or so but it will be at an ever reducing price. That's why I said that Eagle pines would need a longer lenght of use than 2042 as it was very unlikely to be sold out before it reached 2012 and now I'd say that possiblity is even less likely than before, if it ever even happens. Regardless of the guides hype about EP still being a go, I don't see it happening, at least not nearly on time.

Prediction is that DVC will be selling for roughly around the same price as today or a little less (maybe $50-55 pp) with 20 years left after inflation and will decrease by around $2 per year for the next 10 years and then by around $3 yer year for the last 6-7 years.

 

[Granny]

Dean...

I think we're agreeing that after another 10 years the value relationship of the current DVC will change.

The only thing that could keep propping up the prices at that point would be a whole bunch of inflation. I'd rather have a devaluing DVC asset than that!!!!!

 

[Dean]

Originally posted by Granny
The only thing that could keep propping up the prices at that point would be a whole bunch of inflation. I'd rather have a devaluing DVC asset than that!!!!!

True but the end result is the same. The overall value will start to decrease. That's why I hope that IF they offer an extension, they do it by 2010.

 

[ZerasPride]

I'm glad I came back to this thread one more time! Becky and Amy you've both given me lots to think about and I thank you. Trading with another DVC member who doesn't own at HH but who would be looking to stay there and I on Disney property is a great idea. I also like the notion of perhaps making a modest cash point purchase before the increase and then with banking and borrowing, I'd have enough of my own points for occasionally on-site stay. DH has already told me he doesn't want to accompany me when I go down to Disney so all I'd really need is enough points for a studio every two or three years.

Again, thanks guys, it's nice to have so many options!

Lisa

 

[HarrietSLP]

For dh and I , the point of too much appears to be now. We have been vacationing at Disney since the early 70's but now like to travel and explore other places as well. We still like to have our annual Disney fix but have no plans to purchase more pts in the near future. Also.....the maintenance fees have increased dramatically ( as we expected) at Vero and I don't want to have several hundred dollars of maintenance fees every month. Right now....we are happy with our 260 pts and certainly will not buy more at $80 a pt. I'll look for a resale first before I buy more points from Disney.

HARRIET
DVC Member '96 Vero & OKW
Next trip: DVC 10th Anniversary Cruise 4/7-4/11

 

[vernon]

If as most people seem to agree the break even is somewhere between 4-8 years then I don't see why DVC reaches a point where it is uneconomical with 30 years to go (i.e.2012). We have to all agree that the current price cuts are a reaction to Sept 11 and are likely to be an anomoly. As long as hotel rates increase , then there is no reason why DVC costs shouldn't increase at a similar rate for at least another 20-25 years.

I don't agree with the argument that DVC costs will decrease rapidly over the last 20 years of it's existance UNLESS you think that WDW room rates will be the same in 2040 as they are now, even with a moderate inflation of 3% per year, a room which currently costs $150 a night will be $447.85 ( plus tax) a night by 2040.

Lets says for example a studio at OKW, as they roughly go for $150 a night ( if you're lucky) at the moment, and inflation IS only 3% a year so the room is $447 a night in 2040 a 10 night stay in $cost is 4470 plus tax at 15%= $5140. Points cost will be 150. If you work that dues increase at the same rate as hotel rooms ( although they have historically increased at half the rate of hotel rooms) dues are going to cost 1663 per year . 5140-1663 = 3477. 3447/150 = $23.20 per point ( and you have enough points for a holiday the following year at a cost of dues alone)

If you borrowed the points from the next year ( i.e. use the last two years of points for one booking) then as long as you buy your DVC points for less than $46 per point you are saving money. It might seem a slightly long winded way of saving money but I don't think inflation will be that low and if DVC points are where Dean predicts ( less than $10 per point) I think people are going to be happy to save $2000 for a bit of paperwork ( and have a cheap holiday the next year).

While the sums may not be as good as people who have already bought remember, they still add up. DVC STILLS breaks even in most cases less than 8 years.

I know there are people keen on DVC 2 , but I think having two different entities is messy and IMHO Disney don't need it. I think you will see maybe one more resort after Eagle Pines ( finish about 2020) and then Disney will wait for 2042 to elapse before reselling the current resorts. They will first offer the DVC owners that remain a "discounted price" to renew and will then start sales to the general public a couple of years later. All this is speculation on a LONG time into the future about the future of DVC

But to come back to the original question
At what point? If you do your time/value of money there is no reason for the points cost of DVC to reduce for at least 25 years and IMHO 30 years is more realistic. The only reason for this to be unsound reasoning is if the price of WDW hotels decreases over a long period of time. I don't think that is likely, but it isn't impossible. Moderate inflation is sufficient to keep DVC value, IMHO deflation is more damaging to people's assets and wealth than a small and manageable general cost of living inflation (see Japan's current problems)

 

[DVCDAVE]

VERNON;

You have made the best argument I've heard in a long time. I also agree with you about DVC II, I never understood why, with 40 years to go why Disney would worry about starting DVC II, then there would be two products competeing, the 'old, dusty, run down, and well used DVC', and the brand spanking new, modern, DVC II. What ?, makes no sense to me, it would automatically deflate a succesfull, and well selling product. I wouldn't let my marketing department touch it with a 10 foot pole, hence they wreck it.

 

[Dean]

I'm afraid I disagree with Vernon at every turn. I look at this as a timeshare ownership and to a certain extent like a financial investment. In large part it depends on what you are comparing to and what one's vacation and specific WDW vacation habits have been as well as family size and makeup. Those that would go to WDW every year and stay for 5-12 days in a Deluxe hotel will have a far different comparison than someone who would go once every few years and maybe stay off site part of the time or at most stay in a moderate. You must also compare to discounts and should never use the rack rates. While the best discounts may be fleeting and hard to come by, there will always be some type of discount even during Xmas most years. It also depends on your savings habits. Someone who always takes nice vacations but can never save any money will look at things much differently than myself who saves every month (even before I pay my mortgage) and took the money out of savings to buy both DVC contracts. Those of us that had the free passes will also fare far better than those that didn't.

Of course DVC isn't strictly about the dollars, otherwise non of us would likely own. You must look at your personal habits and financial situation. Most should also consider the lost earnings on the purchase price as well as the interest paid if one financed. Type of room utilized, weekends vs weekday and season of travel will have a large affect on the numbers. Expecting a break even in 4-8 years is a best case scenario and not realistic for most people. For most regular visitors who did not have park passes, I'd guess one is looking at between 15 and 20 years in most situation. Obviously there are variables inpossible to account for and those that will vary from one family to another.

As for DVC 2, it really doesn't matter as any DVC resort will be included in the overall club regardless of date of expiration.

In terms of end of time resale value, again, I look at it much like I would any other timeshare. When you note that closing costs will increase, likely more than room costs will, that the price is somewhat articificially high because of the ROFR as well as the continued selling of new resorts and that the maint fees late in the course are likely to be far higher according than they are now; I stand behind my original evaluation. WDW rooms will not continue to increase above the rate of inflation and actually have come down overall within the past 7 months, even before 9/11. BW studios have been available at far less than the $150 Vernon noted though specials will be variable and not available at all times. Also a 40 year old room will be far less according than a 5 y/o room even with adequate upkeep.

I've seen MX timeshare (on the DVC exchange list) with 6-7 years left sell for $1500 for a 2 BR for a high season week even when there was the promise of a cash residual at termination worth 2-3 times the purchase price. I've also seen DVC contracts offered for sale and a price accepted for $40 per point though DVC did offer to buy that one back and they ended up at $50 pp, this was about 2-3 years ago and a member of this BBS. I've seen OKW contracts offered for sale and a price accepted of $50 per point within the last month with current and banked points though the deal fell through related to a divorce situation. I've seen BW offered for $54.50 per point this week with current (about half of them) and upcoming points intact (Summer 2002) available. Whether DVC would or will let these deals go through is the question but the fact is there are those out there willing to sell for far less than is batted around this board. Once DVC no longer cares about propping up the value, the target price will drop significantly. I've bought 9 timeshare weeks over the past few years and in every case, I could have sold immediately for more money than I paid.