BCV and BWV may have reached peak value

[BeachClub2014]

For example, you said that you don't like renting points. So you subjectively value rented points less. That's totally your right. So if I said, "the math shows buying DVC costs about the same as renting points" -- You very reasonably might conclude, "if they cost the same, I would rather own the points than rent them."
Now, what if buying the points was twice as expensive as renting? If you could rent the points for $20 per year, but buying them was $40 per year? Or $60 per year? At some point, you'd say, "I prefer owning the points.. but it's not worth paying triple the price."

Not exactly what I said.

What I said was that I wouldn't rent points in a million years so the rental cost comparison is nowhere in my mathematical formula as renting doesn't exist for me. THAT is my whole point about different people using different inputs and variables in their math. Not everyone's equations contain the same variables.

But too often I see people just trying to rationalize their purchase. "I broke even after just 6 years!" (by comparing to rack rate, and by totally excluding dues payments, etc). That's not objective, it's just wishful thinking.

I'm sure that some may do so. I am not one of them, though. Here's our "value" rationalization: we've bought our 500+ points because we wanted them and could afford to do so. So we did buy them and enjoy using them immensely. Others may not agree with us, but it isn't for them to decide.

And I do understand and appreciate your point and the interesting discussion. Thanks!

 

[Brian Noble]

failing to discount for lost opportunity

I've mostly given up trying to convince people of this, but I appreciate and salute you for carrying the torch.

It doesn't matter if it wouldn't have been "invested", or would have been spent on vacation anyway, or for any of a number of other reasons. If someone believes they can ignore opportunity cost on the purchase price, that's equivalent to telling me that they'd happily loan me $10,000, and have me pay them back $500 a year for 20 years.

I don't think anyone believes that. But, if they do, I can draw up the paperwork in about an hour.

 

[peabody58]

We bought 100 pt BWV direst at $200/pt last fall during the BWV promo. It was a whole lot cheaper than what the lawyer wanted to process the divorce my DW threatened me with if we didn't add-on, let alone what I would have lost in the divorce settlement. So I am money ahead anyway I calculate it! Also very happy to have lots of low point BWV Standard rooms booked already! It's all about perspective.

PS - we used our Vanguard mutual funds which were at near all time highs to fund the add-on. Those same funds would have lost a lot of money these past few months for sure! I wouldn't do it today though as the overall economic hit would be too big.

 

[KalamityJane]

They report it -- based on incorrectly calculated math. (generally comparing it to rack rate, often forgetting to include dues, failing to discount for lost opportunity).
The most direct comparison is compared to renting points, at between $16 and $21 per point. Even a real "deal" of a re-sale contract will take 12-18 years to break even. A incentivized direct contract can break even in about 15-22 years.... A sold-out direct contract will take 25+ years to break even.

Now, this does NOT include the possibility of re-selling the contract. You can break even by using a contract for 6-10 years and then re-selling it, assuming it has increased in value over that time period. (so this may not work with the 2042 contracts).



I've broken down the math elsewhere, but no..... you get almost no discounts on 2042 contracts.

Let's say you by 100 points of BWV for $150... Add closing costs, about $16,000. Currently $8.08 dues. That's $15,352 in dues over 19 years.
Adjust the immediate costs for lost opportunity (in other words, paying $16,000 at once is actually more costly than paying $800 per year for 20 years, they are not the same) -- With an annualized discount rate of 3.5%, you get a present cost of approximately $22,200, add in the dues, you're at about $37,500 -- Spread over the 19 years of the contract, you're paying: $19.70 per point per year. That's about the same as renting -- it might even be a little more than renting.





Unless you can get a fully loaded contract for under $125 per point, you're not seeing any real financial benefit.

You should factor in inflation costs as well for the lost opportunity. $800 in 20 years won’t have the same purchasing power as $800 now, for instance. However, whatever you paid for the contract is at 2022 prices (or whenever you bought) and excepting dues, that stays at that price. If you rent, that price will go up. I rented in 2017 for $10-12/pt; now $18-22/pt is standard.

That being said, investing that money in the stock market would have far exceeded any benefit you’d get from freezing the price of your vacations, so there’s that.

 

[CarolMN]

Math discussions are always interesting. But they do not consider the SUBJECTIVE value, and in the case of BCV & BWV, that is a very important factor in many purchase decisions. It's not just about the money for those folks. I compare it to buying one's dream car versus one that provides the same transportation capability for a lot less money. The heart wants what the heart wants. Good/Best/Shorter Break-Even "deals" are soon forgotten if you can't stay where you want to be. That's worth something - actually a lot to those of us who love the EPCOT resorts.

If one wants to stay at BCV or BWV during the busy seasons, you pretty much NEED the home resort booking priority window. Renting is not a sure thing for those resorts, and owning still beats Disney cash prices.

 

[havoc315]

Not exactly what I said.

What I said was that I wouldn't rent points in a million years so the rental cost comparison is nowhere in my mathematical formula as renting doesn't exist for me. THAT is my whole point about different people using different inputs and variables in their math. Not everyone's equations contain the same variables.

No... the inputs are the same. The subjective valuation is what's different.
The price of a peanut butter sandwich is $5 --- I am allergic to peanut butter. I would NEVER buy the peanut butter sandwich. But the price is $5 regardless.

You would never rent points. I get it. If buying points was $5,000 per point, and renting points was $1 per point -- You still would buy the points, just like I would never buy the peanut butter sandwich.
But that's got NOTHING to do with math.

If you're saying you would never rent points no matter what price, then you're not applying different math -- You're simply ignoring the math. The math is just irrelevant to you. Just like the math is irrelevant to whether I buy a peanut butter sandwich.

I'm sure that some may do so. I am not one of them, though. Here's our "value" rationalization: we've bought our 500+ points because we wanted them and could afford to do so. So we did buy them and enjoy using them immensely. Others may not agree with us, but it isn't for them to decide.

That's fine. I'm certainly not judging you. But your valuation isn't a mathematical $$$ evaluation. Just as my refusing to buy a peanut butter sandwich isn't a mathematical $$$ evaluation.

 

[havoc315]

I've mostly given up trying to convince people of this, but I appreciate and salute you for carrying the torch.

It doesn't matter if it wouldn't have been "invested", or would have been spent on vacation anyway, or for any of a number of other reasons. If someone believes they can ignore opportunity cost on the purchase price, that's equivalent to telling me that they'd happily loan me $10,000, and have me pay them back $500 a year for 20 years.

I don't think anyone believes that. But, if they do, I can draw up the paperwork in about an hour.

Or if anyone honestly could say they would pre-pay 30 year's worth of hamburgers at McDonald's at full price.

 

[havoc315]

You should factor in inflation costs as well for the lost opportunity. $800 in 20 years won’t have the same purchasing power as $800 now, for instance. However, whatever you paid for the contract is at 2022 prices (or whenever you bought) and excepting dues, that stays at that price. If you rent, that price will go up. I rented in 2017 for $10-12/pt; now $18-22/pt is standard.

There are lots of assumptions that go into the calculations that can't be estimated with exactitude. But assuming a discount rate of 3% means you are assuming that investing (or using the money for purchases) is 3% more valuable per year than inflation.

Now, lots of things could happen. Inflation could be 20% per year for the next 20 years, while the stock market goes down over the next 20 yeas, which would make your DVC purchase look great. Or climate change could turn your DVC into a swamp that nobody ever wants to visit, making your DVC purchase worthless.

So we use the most reasonable assumptions, which is why I typically go at about 3%, and I assume DVC will keep its future value.

That being said, investing that money in the stock market would have far exceeded any benefit you’d get from freezing the price of your vacations, so there’s that.

Far more than the 3%... but again, I use 3% as a conservative assumption.

 

[BeachClub2014]

No... the inputs are the same. The subjective valuation is what's different.
The price of a peanut butter sandwich is $5 --- I am allergic to peanut butter. I would NEVER buy the peanut butter sandwich. But the price is $5 regardless.

You would never rent points. I get it. If buying points was $5,000 per point, and renting points was $1 per point -- You still would buy the points, just like I would never buy the peanut butter sandwich.
But that's got NOTHING to do with math.

If you're saying you would never rent points no matter what price, then you're not applying different math -- You're simply ignoring the math. The math is just irrelevant to you. Just like the math is irrelevant to whether I buy a peanut butter sandwich.

At the risk of continuing the lecture, who decided that only you get to decide what inputs go into a math formula? Where is it written in stone that I would have to use a rental point comparison in any mathematical analysis? If you choose to do so while eating your $5,000 peanut butter sandwich then feel free.

And yes, those are rhetorical questions as we will obviously not see eye to eye or formula to formula on this one.

PS: It doesn't matter to me whether you judge me or not, I am really fine with the purchases that we've made.

 

[Brian Noble]

Where is it written in stone that I would have to use a rental point comparison in any mathematical analysis?

If your goal is to be cost-efficient in securing DVC lodging, then point rental is often (but not always) the most cost-effective alternative to owning.

There are a few corner cases in which renting from Disney at the prevailing discount rate is better than a point rental, but they tend to be 1BRs at very specific times of year---and after the rebalancing that reduced the point values in the summer season, I think a lot of those corner cases have been eliminated. It's been a while since I looked at them.

 

[BeachClub2014]

If your goal is to be cost-efficient in securing DVC lodging, then point rental is often (but not always) the most cost-effective alternative to owning.

There are a few corner cases in which renting from Disney at the prevailing discount rate is better than a point rental, but they tend to be 1BRs at very specific times of year---and after the rebalancing that reduced the point values in the summer season, I think a lot of those corner cases have been eliminated. It's been a while since I looked at them.

Thanks, @Brian Noble, but that's not one of my goals. I do understand the relative value proposition between renting points versus owning the same points or paying cash for the same room. And that value proposition may be different for everyone.

My whole point, all along, is that there is a multitude of ways that one can determine which route is the best value to them. There isn't a one-size-fits-all approach nor is there only one way to do the "math."

 

[havoc315]

At the risk of continuing the lecture, who decided that only you get to decide what inputs go into a math formula?

The calculation of cost is an objective measure. While some of the factors may require reasonable assumptions, it is still ultimately an objective truth. You can't just say, "I'm not going to include closing costs and dues because I don't feel like it."

Where is it written in stone that I would have to use a rental point comparison in any mathematical analysis?

I said that comparing it to rental points was my subjective choice. The COST is objective. The cost is $xxxx. Personally, I then compare it to Rental. You can compare it to something else. Or you can entirely ignore the cost.

It may be: Break even in 22years compared to rental.
Break even in 20 years compared to expected cash rates.
Break even might be in 19 years compared to rack rates.


You can choose whichever comparison you want. I choose to compare it to rental rates -- That's my subjective choice because it's the truest comparison. (cash rates are entirely different- they include housekeeping, they don't include parking, they have the flexibility to book almost any time without needing to plan many months in advance-- so cash rooms are so different, rented points are the most similar).
If you want, you can compare it to the cost of buying a new car. Compare it to anything you want, that's your choice.

But if the calculated cost is $40,000 (for example), or the calculated cost is $2,100 per year (for example), those are the objective measurements. You can compare it to anything you want.
You can say, "DVC is $40,000.. but buying a mansion in Beverly Hills is $12 million.. so DVC is a real bargain!"
You can compare it to anything you want!
Some comparisons may make sense, other comparisons may be totally irrelevant. But anybody is free to make any comparison they want.

 

[BeachClub2014]

The calculation of cost is an objective measure. While some of the factors may require reasonable assumptions, it is still ultimately an objective truth. You can't just say, "I'm not going to include closing costs and dues because I don't feel like it."



I said that comparing it to rental points was my subjective choice. The COST is objective. The cost is $xxxx. Personally, I then compare it to Rental. You can compare it to something else. Or you can entirely ignore the cost.

It may be: Break even in 22years compared to rental.
Break even in 20 years compared to expected cash rates.
Break even might be in 19 years compared to rack rates.


You can choose whichever comparison you want. I choose to compare it to rental rates -- That's my subjective choice because it's the truest comparison. (cash rates are entirely different- they include housekeeping, they don't include parking, they have the flexibility to book almost any time without needing to plan many months in advance-- so cash rooms are so different, rented points are the most similar).
If you want, you can compare it to the cost of buying a new car. Compare it to anything you want, that's your choice.

But if the calculated cost is $40,000 (for example), or the calculated cost is $2,100 per year (for example), those are the objective measurements. You can compare it to anything you want.
You can say, "DVC is $40,000.. but buying a mansion in Beverly Hills is $12 million.. so DVC is a real bargain!"
You can compare it to anything you want!
Some comparisons may make sense, other comparisons may be totally irrelevant. But anybody is free to make any comparison they want.

Okay, thank you.

 

[havoc315]

If your goal is to be cost-efficient in securing DVC lodging, then point rental is often (but not always) the most cost-effective alternative to owning.

There are a few corner cases in which renting from Disney at the prevailing discount rate is better than a point rental, but they tend to be 1BRs at very specific times of year---and after the rebalancing that reduced the point values in the summer season, I think a lot of those corner cases have been eliminated. It's been a while since I looked at them.

With Disney's recent meager discounts, it's rare that a cash room will be cheaper than a point rental. But if they ever bring back generous discounts -- particularly if they ever bring back free dining, then there will be many scenarios where cash rooms may be cheaper than point rentals. (Though generally with 1 bedroom units, with preferred view units).

Reason why rental points are the best comparison:
1 -- Because if you don't use your points, you can rent them out for the rental price. Thus, the rental price establishes an annual value for your points.
2 -- Rental points get you the exact same units as owned points. Where DVC villas aren't always available for cash purchase.
3 -- Direct and Rental points both have limited housekeeping. Cash rooms have daily housekeeping.
3 -- Direct and rental points both include parking, cash rooms do not.
4 -- Direct and rental both require booking far in advance for in-demand units and times of year, while cash rooms have far more flexibility in booking and cancellation.
5 -- Cash rooms may include perks (like free dining) that don't equate to direct/rental.

#1 is the most objective measure. If I don't use my points, I can rent them out for $15-$20 per point -- Thus, the points are "worth" $15 to $20 per year.

 

[karen4546]

You’re underestimating the rental cost for BCV (it’s why brokers rarely have any) and you’re vastly overstating the supposed ease and ability to rent (essentially equating it with booking availability for BCV owners). The math might be right but it’s not realistic.

Agree!
You could easily rent BCV and BWV points for $25/30 per pt on confirmed reservations.

We bought 100 AKV pts direct and added on 25 more a few months later.

We have a vacation/entertainment budget of roughly $12000/year. Movies, Netflix, Directv, hotels, cruises, flights, meals, dinners out, etc come from that budget.

Our buy in was $17,600 for AKV. We purchased our APs out of the Vac. budget -out of state Platinum at the time =$1200 x 3.

When we bought in, we got the 2018 and 2019 pts. booked our welcome home for 10 nights/studio at Beach Club Villas (actually 2 studios for 5 nights). I valued those rooms on the low end of $300/night = $3000

The next year, we renewed to the Gold AP for a savings of $400 x 3-2020. We now have Sorcerer APs

We have used our pts @ AKV for value studios, CL studios, and 2br values, CCV studios, PVB studio, BWV studio, and currently have 2 gardenview studios @ BWV booked for September-after much stalking and waitlists

After going down the rabbit hole, I am saying that you can get value out of a resale purchase @ BWV even though it has an exp. of 2042.

The Location is prime and if you bought 150 pts and rented them out @ $25/ pt or a confirmed reservation, or just used the points yourself, the value is there-especially during the Epcot festivals.

 

[BrianLo]

I think this conversation is fascinating, not because of the back and forth about the individual subjectivity, but rather the broader finding that the 2042 resorts are essentially at their price peak. Which, eventually they have to be. The contracts certainly won't be 150$ a point when there is five years remaining.

It's a little too bad that we may lose sight of some of the overall data with the iffy market trends coming financially, but there has to be an inflection point that the resale contracts start to shed 6-10$ or so annually.

I wonder if once the more regular expire cycle starts, people get wise to the best time to sell in terms of contract length. My personal guess was it was going to be about 20 years.

Also I don't have any real issues if anyone emotionally still pays for these resorts, but there is an intersection of people who don't mind AND complain about Riv Resale Restrictions that I find oddly missing the point.

 

[Madame]

I think this conversation is fascinating, not because of the back and forth about the individual subjectivity, but rather the broader finding that the 2042 resorts are essentially at their price peak. Which, eventually they have to be. The contracts certainly won't be 150$ a point when there is five years remaining.

It's a little too bad that we may lose sight of some of the overall data with the iffy market trends coming financially, but there has to be an inflection point that the resale contracts start to shed 6-10$ or so annually.

I wonder if once the more regular expire cycle starts, people get wise to the best time to sell in terms of contract length. My personal guess was it was going to be about 20 years.

Also I don't have any real issues if anyone emotionally still pays for these resorts, but there is an intersection of people who don't mind AND complain about Riv Resale Restrictions that I find oddly missing the point.

I don’t dislike the resale restrictions because it restricts price per point on a resale (bc I wouldn’t buy RIV bc of the resale restrictions.

If I bought BCV as a restricted post 2018 resale buyer specifically to book bcv I wouldn’t be impressed that RIV direct buyers can book at my resort (even if it’s at 7 months) and compete with my points while I don’t have a similar option at RIV. This is especially true given bcv/bwv’s low point charts and RIV’s inflated chart.

 

[Brian Noble]

With Disney's recent meager discounts, it's rare that a cash room will be cheaper than a point rental.

I went back to look at this for my usual "spring" break week in late February/early March.

That week in a 1BR Standard View at Riviera at rack rate works out to be $24.70 per point. ($7,929 including tax; 321 points). The most recent discounts for that room (the Disney+ rate) has it at 25% off. That brings the per-point value down to $18.52. RIV point rentals are being advertised at $20-21 on the R/T board right now. Brokers have it at $21-23. The lowest price on the R/T board for non-distressed points is $18, and saving +/- $160 for a week-long stay is no where near worth taking on the extra risk of a DVC rental.

This is probably a corner case, but it's at least one. I spot-checked another (SSR Standard 1BR same week) which gives a per-point value with the prevailing 25% discount of $17.30. For someone like me who really prefers 1BRs, point rentals are getting to be pointless* at current rates.

(*: Yes, I did that on purpose.)

For that matter, it starts to bring up the question of whether or not DVC ownership makes sense at all for someone who wants to stay in 1BRs most of the time. A quick back-of-the-envelope calculation suggests it can work at resale prices, but at developer prices it is more tenuous.

Here's one that works out better: Bay Lake 1BR Lake view. That's $28.90pp rack, and the recent discount was only 10%, yielding $26. If I could secure that as a rental at $20 or so it would be worth taking on the extra risk of a DVC rental.

 

[havoc315]

I went back to look at this for my usual "spring" break week in late February/early March.

That week in a 1BR Standard View at Riviera at rack rate works out to be $24.70 per point. ($7,929 including tax; 321 points). The most recent discounts for that room (the Disney+ rate) has it at 25% off. That brings the per-point value down to $18.52. RIV point rentals are being advertised at $20-21 on the R/T board right now. Brokers have it at $21-23. The lowest price on the R/T board for non-distressed points is $18, and saving +/- $160 for a week-long stay is no where near worth taking on the extra risk of a DVC rental.

This is probably a corner case, but it's at least one. I spot-checked another (SSR Standard 1BR same week) which gives a per-point value with the prevailing 25% discount of $17.30. For someone like me who really prefers 1BRs, point rentals are getting to be pointless* at current rates.

(*: Yes, I did that on purpose.)

For that matter, it starts to bring up the question of whether or not DVC ownership makes sense at all for someone who wants to stay in 1BRs most of the time. A quick back-of-the-envelope calculation suggests it can work at resale prices, but at developer prices it is more tenuous.

Difference between developer prices for a 40-50 year contract and a 19-year contract.
My back of the envelope math, even with adjusting for opportunity costs, buying in to Riviera runs about $15-$17 per point per year. So arguably, if you exclusively book 1 bedrooms, you may save a little over the long term, but not much.

Meanwhile, buying BWV now, at resale, works out to $19-$20 per point -- Very hard to realize any significant savings on 1 bedrooms.

The real "value" in using points is always studios, where one can often capture $30-$40 in "value" per point.

So if you exclusively book 1-BR units, I see it like this:
-- It would be economically irrational to purchase a direct 2042 contract, as it will cost far more than cash rooms / renting points.
-- It would be borderline economically irrational to buy 2042 resale, where you're probably looking at about break even, possibly a small savings, possibly a small loss.
--Buying a 40+ year contract will likely produce a savings. BUT, it may be a pretty small savings. The degree of the savings will largely be dependent on the rise of room rates. If room prices increase 10% per year while dues only increase 3% per year, then you might ultimately save a good chunk of money. (and historically, room rates have shot up at a fast pace). On the other hand, if the pace of room rate increases slows -- So room prices AND dues both go up about 3% per year, then any DVC savings will be rather small.
-- Now the BIG caveat -- Re-selling at some point changes the math and creates savings. So the longer contracts give you opportunity here. 15-20 years of basically breaking even on your vacations... and then getting a nice chunk of change back.



I'll run the math myself for my own purchase, 2020, bought 49 years of Riviera, 200 points, for $35,000.
With dues, over 49 years ---Including opportunity cost, total expenditure over 49 years is $148,000. -- Or $3,020 per year.
August 7-12, 2023 would be 200 points for a standard 1 BR. Booking it as a cash room, room only, it is $5,845.

So a pretty nice discount off rack rate!
But, let's assume that room will eventually be available with a 25% discount (which is a large assumption) -- $4,383. Still a savings, not as significant.
Now, let's assume you have a family of 4 getting summer free dining -- Now, you're getting closer to break even.

Anyway, with my assumptions -- For me, if I stuck to standard 1 BRs, then the break even point is 25-34 years. After 25-34 years, vacations are entirely free. (while I'm still paying dues, I already got the value of my future dues payments after 25-34years).
If I were to book preferred studios -- break even is about 23-30 years.
But if I stuck to standard studios: Break even in 20 to 27 years.

And absolute worst -- Preferred 1 BR: 30 - 40 years!

So-- Best case scenario, having bought RIV direct in 2020, if I stuck to 100% standard studios, I could break even in 20-27 years.
Worst case scenario, if I stuck to preferred 1 BRs, then break even would be in 30-40 years. So potentially, savings would be minimal.

In reality, I mostly do 2 BRs, and a mix of studios and 1 BRs. I anticipate my "free vacation break even" is about 25 years.

While I ran this math for MY Riviera purchase, the math is pretty similar for most DVC purchases, give or take a few years.
It's almost impossible to break even in less than 20 years, even buying re-sale. Which is why buying 2042 is really questionable right now at anything more than about $150 per point.

 

[Brian Noble]

The real "value" in using points is always studios

There are a couple of things about DVC that are very odd compared to other timeshares, and the Studio under-pointing is one of them. (The other is the lockoff premium).

Either way, I did not get into timesharing to stay in a glorified hotel room. I think I have booked a studio at a timesahre exactly once in the 15 years I've owned. It was in Colorado about a half hour from the Western entrance to RMNP. Even that was a psuedo 1BR with a King in a loft and a functional kitchen.

I do have a hotel room stay coming up next winter at an odd-duck of a resort in St. Croix that is long in the tooth and could be charitably described as "basic", but the location (on a small island 10 minutes by boat from Christiansted) was too cool to pass up. I am not 100% sure we will keep it, but for now...why not?