Buying into DVC and point prices

[tommy_z]

Ok, so here's my question:

I'm looking into buying into DVC. I contacted the home office and they told me that if I'm serious I should do it ASAP as point prices are going up from $72 to $75 per point this summer. And from the looks of some of the things I've read on the boards, looks like people are raising resale prices as well.

To me, this doesn't exacltly make sense. Why should I pay $10 (or more) per point than someone who bought into DVC back in 1992, when at this point in time, I would have 10 fewer years to use them. If anything, points should be going down in price.

I understand inflation, and raising prices, and people trying to get their investment back, etc. Still, you don't see people charging more for a used car than what they paid for it. (except for a Harleys, but that's a different discussion) Furthermore, even though this is technically real estate that we're buying, I don't think the same type of appreciation rules apply.

Maybe I'm just dense, but I wish someone would explain this to me.

Thanks everyone,

--Tom

 

[Richyams]

Its not about right or wrong, fair or unfair, its about what the market will bear. Capitalism and freedom pretty much soms it up. They wouldn't be able to keep raising prices if people weren't buying.

Many think that the market will be able to bear rasing prices for another 15 years.

I am just very happy that I did buy in '92.....

 

[dvc1995]

Real Estate is different than a car. It has a tendency to go up in value. Companies like Disney have changed the image of the timeshare business. The DVC has become a proven investment. When I bought, I received free theme park passes for five years. I always thought I would sell when the pass program terminated but I could not because the value of the membership is too great. I disagree with members who say Disney is not a good trade. I have successfully rented and traded and still enjoyed a family Disney vacation at least once every other year. The value of my membership has already been returned to me several times over and frankly, if you look hard, you can probably come close on the resale market to what I paid for Old Key West in 1995. Look at it this way, you should be glad to buy into a timeshare that is likely to increase in value and has a stable brand name behind it. It is all about supply and demand. I doubt many purchasers are dissatisfied with the product and that is why there are so few resales. No, I don't work for Disney but I do love DVC.

 

[Dean]

Do you have any Yahoo stock you'd like to sell me, oh but it must be at 1992 prices. LOL. It's fair because that's what DVC's worth on the market whether DVC or retail. Whether it's worth it to you, only you can answer. My concern is that you're going to get hung up on the price increases and miss out on a wonderfull family vacation opportunity. Good luck

 

[Happy Birthday Cat]

The nice thing about the free market is that you don't have to buy. If you want to buy, you pay the going price. If you want to save money, buy from someone other than Disney and offer them what you think they are worth. If the person (and market) agree, you will get the points. You can get points lower than their asking price. Of course it won't be the VWL.

Good Luck!

 

[DVCDAVE]

Do you own your own home or rent an apartment. If so, when you go to sell your house that you bought in 1992 do you expect to sell it for less than what you paid for it ? Seeing it is used and the roof and appliances are more worn out,... not to mention the frost heaves working over that driveway in Minn. Or, if your rent I certainly hope your land lord lowers your rent every year, as I am sure that apartment is more worn out than any prior year.

I know this response sounds sarcastic, but I really don't mean it to sound that way, but I didn't know how else to word it any better. Sorry in advance.

 

[tommy_z]

Yeah, ok. I understand the real estate appreciation thing, but I still say that those rules don't apply in this case since there is a limited use time. Free market or not, stock prices notwithstanding (FYI: Yahoo's IPO closed at $33, unadjusted, today it's at $21), I still feel a little cheated when I'm paying increasing prices for a depreciating asset. (Even more so when you factor in the free passes that aren't available any longer.)

I'm not asking you to sell me points at $5 a pop. I'm just trying to point out something that doesn't make sense according to basic economic and accounting theory.

Ok, I'll get off my soapbox now. Thank you.

 

[DVCDAVE]

It isn't as simple as a limted use of time, alone. It has to do with the cost of comperable rooms, and expected inflation in the cost of those rooms. This is the economics of the equation. Once you purchase, you lock in the cost. Your annual dues is a carrying cost, and historically it has gone up with the inflation rate. Now, the hotel rooms at the resort are considered to be the comparable asset. Most DVC members wouldn't even consider staying offsite. However, those rooms are even smaller than a DVC studio room, and the resort rooms have historically risen at a 10% rate. Far more than the inflation rate. This is the single best attraction to purchasing DVC.

Do NOT buy DVC if you are not a WDW vacationer. There is no attraction to do so. There have been published spreadsheets done on this board that demonstrate the economic benefit of ownership over the remaining life of the lease. However, this board moved to this new server last week, and those threads have not com over yet. (if ever). If you wish to look in to this further, gop back to the old server and do a search using various key words like 'spreadsheet' and you will see for yourself. Even those spreadsheats have certain assumptions built in to them like rate of return on the time value of money, inflation etc.... and can be argued further any way you want. However, no spread sheet, economic or accounting model will calculate the value of one item....'utility'. That is the value of staying in WDW in a luxury 'suite' on your family vacation.

One thing for certain in my wife and my mind is that no matter what, if we stay in WDW for the next 5 spring vacations for 1 week, we recovered ALL the cost of purchasing our points PERIOD. If our points are then worthless we have lost nothing, not 1 cent. Even if we never go again. The best part is from that point forward we still have 37 more years to use our points.

So, my advice is to not look at what someone else has paid, look towards calculating your break even point, and the rest is gravy.

 

[Richyams]

And you are absolutely correct. I was going to post a response before you. These real estate analogies are all really off base. The declining length of ownership makes them invalid.

It is simply a case of the market determining the price. Disney raises the price, they just keep selling.

They haven't included passes for many years. That was simply an incentive to get the ball rolling. They had to deal with the stigma of the timeshare industry.

They raise the prices and still have buyers. Planty of buyers. That is the reason they are able to do it. That is also the reason that if you decide to become a member, their prices or a small savings on a resale is what you will be paying.

 

[Dean]

Then don't buy in! It's your money. It may or may not be financially reasonable for you, your family and how you would use it. DVC is not for everyone.

 

[PamOKW]

What you say seems to make sense that with less time the price should go down. But, it hasn't worked that way. People are more excited than ever to get into DVC and are willing to pay to do so. With the way WDW room rates continue to increase, DVC is still a good value and continues to provide deluxe vacations at a reasonable cost....even if that cost is increasing. Expectations are that prices will just continue to increase for at least the next few years.

 

[jfulcer]

naw, to me it boils down to the phrase which seems so innocent, yet so dangerous: "Welcome to the Wonderful World of Disney".

I spend money like water at Disney and am happy (most of the time) with the value I receive, DVC included.

We just keep hitting ourselves over the head: We shoulda bought sooner!

 

[KMarie]

If you look at buying into DVC as prepaying your vacation accommodations for the next 40 years, the cost makes a little more sense.

 

[normr]

DVC is the Harley Davidson of timeshares

 

[prncssjas]

When I first read this post, I wasn't going to reply but now I think I will add my thoughts. DH and I just joined DVC and like everyone else said--I WISH we would have done so sooner. DVC is a great investment for those who primarily go to WDW for vacations (ME!), enjoy luxurious accomodations, and would otherwise spend all their money there. And this is the weird part--Disney prices are high and sometimes truly unreasonable BUT whenever I get there, that all seems to disappear and I get into this Disney mindset where paying $35 for t-tshirt is OK because it's DISNEY!!! I know it sounds off but it's how I choose to spend my money. Normally, DH and I wouldn't spend $$$ for souvenirs or meals but I am willing to pay tons of $$$ to eat with Aladdin and Jasmine!!!

The best part about WDW is that you can chose to do it or not. There are many many MANY other places to vacation but if you love Disney enough, then the $$$ becomes a lot less important--that is, if you choose to spend it that way. There's just something about WDW that makes it soooooo special. While DH and I are still young and just starting out, I would hope to look back on my life later knowing that I spend most of it enjoying my DVC membership.

Hope this dosen't sounds horribly cheesy. I do understand your hesitation--sometimes it is hard to part with large chunks of money, but life is too short--so spend most of it at WDW!! LOL!

Rima

 

[normr]

Looks to me like the 2042 expiration might be the part that's really eating at you, but I look at it this way, I'll be 85 years old when it ends if i make it that far, and my kids will be in their 50's, we'll be able to spend some fabulous vacations with our kids, grandkids and god knows but maybe even great grand kids, I think we'll have gotten our money's worth, And if you buy in instead of procrastinating, you could buy today @ $72 a point and in 2 month's you've made money when the price goes to $75 in June and then even higher in BCV opens.

 

[disneygals]

tommy z...

I struggle with the same question, especially as my dh doesn't want to buy into DVC...this is one justification...


1995...200 pts @ 61....12,200 divided by 47 = 256 pr year

2001...200 pts @ 72....14,400 divided by 41 = 351 pr year

Doesn't look TOO bad if I look at it that way. You'd have to factor in free passes, if you want to torture yourself, but that would depend on number of family members, days, pass prices etc.

I was busy 1992-1996 having babies, so I wouldn't have been going anyway...

disneygals

 

[Joeblack]

Just two things:

First. I totally agree with Normr and I used the same reasoning. I will be able to spend great vacations whenever I want with my children and also my grandchildren before membership expires in 2042. After that, I guess I won't care anymore. I will only have good memories with the ones I love behind.

Second. People who bought in 1992 faced a)the bad reputation of the Timeshare industry which had been involved in several scams. b)the risk of any new venture. DVC was just starting an there was no guarantee it would be so successful as to become probably the best timeshare in the world (according to TUG). Disney enticed new customers with lower prices and free passes becasue they were aware of this risks.

Today there are no passes, but prices still make it quite cost-effective to be a member if you plan to travel to WDW at least once every other year. Many people see WDW as a destination for only children and know no further than the parks. However, WDW has become a city on itslef. One with all kinds of activities for all ages and resorts so well themed and comfortable that you can stay in them without leaving and still have a great, relaxing time....just like most other timeshares, only better and in an ideal location.

2042 is still irrelevant because break even will happen about 6 years from date of purchase. The market know this and therefore price is going up. There will come a time when price wiss start dropping...only that will be many, many years from now when I (and most other DVCers) will have paid off the original investment ans still have good times and memories ahead.

If you like WDW (and I guess you do) and plan to go there at least every other year, I would advice you to buy.

 

[tommy_z]

Thanks everyone for your input! (that doesn't mean that you can't still put in another 2 cents)

I'm really enjoying this thread, and hearing about everyone's DVC experiences! I'm sooo glad I found these boards! I don't know how I survived before! Now I can get my daily WDW fix on an hourly basis!

I hope more people keep posting their thoughts, and any pointers for a WDW junkie and a DVC wanna be.

Thanks again!

--Tom