Does Disney holds its value?

[wendyinoc]

My friends think I am crazy to buy a "timeshare." However, lets say I kept it only 20 years do you think it will be worth less or more what I paid for it? I know most go down in value, but I feel Mickey could be different. What do you all think?

 

[Sabor]

Nobody Knows

However I Bought My OKW Resale in 1998 for $53 a point which included free park passes until 2000 , I can sell it now for $70 - $75 and still profit after broker fees.

This is not an investment though , it is a prepaid vacation plan --- In 20years if you can get back 75% of your initial outlay you are ahead IMO.

As for your Question - I dont think that the price per point can continue rising at its current pace and that in 20 Years you will get less than what you paid but enough to still be way ahead than it would have cost you to go to WDW every year without it.

 

[Charlesaway]

Historically at least, contracts bought 15 years ago hold close to the same value per point, adjusted for inflation, as they did when they were purchased.

Saber sums it up nicely, in that it is NOT an investment, but a prepaid vacation plan, and that if you can recoup the unused portion of the contract, you're really ahead to begin with.

I disagree with the assessment, however, that you will not be able to get @$100 per point in 20 years (close to what contracts are going for), simply because based on historical inflation rates, that $100 per point today will be almost $180 per point in 2027 if inflation remains relatively constant.

Again, that $180 will have the same purchasing power of $100 today, but thinking about it that way, it wouldn't be inconceivable for resale contracts, subject to dozens of unknown factors, to be selling for $130-$145 per point (or about 75% of a 'new' point).

In the end, the point I make is that even people who bought into OKW in 1990 at $48 per point and are selling their points now for $77 aren't gaining any purchasing power. Their cost per point is simply being recouped around 100% of value, adjusted for inflation.

 

[browniemtb]

Wouldn't one think that the closer you get to a resorts experation that the price per point would decline significantly? In 20 years there would only be 15 years or so on some contracts, unless you bought an extension. But purchasing an extension just adds cost to the initial buy in....

I can't agree more with the two above posts. This is not an investment and should not be purchased with the intent on selling for a profit. It is a prepaid vacation plan that locks in todays rates for tomorrow. If by chance you can recoup most or all your expenses if you had to sell, great. I feel that the way DVC is run you have a better chance of recouping your costs more so than other timeshares on the market.

Brownie

 

[RLCarmichael]

My friends think I am crazy to buy a "timeshare." However, lets say I kept it only 20 years do you think it will be worth less or more what I paid for it? I know most go down in value, but I feel Mickey could be different. What do you all think?

Well, I am in the real estate business. I absolutely NEVER thought I'd buy a timeshare. But through ebay, I have bought and sold timeshares that people paid $5-12k for as little as $1.00. That's right ONE dollar. The big selling feature is you can trade it and spend your week ANYWHERE. Well only if people have weeks they don't want to use - generally places you don't want to go either.

In 30 years I seen LOTs of changes in real estate. The one constant is that the THREE most important things in real estate are LOCATION, LOCATION and LOCATION.

Disney HAS the location.

It is a real estate interest but it's not forever. DVC is a limited time right to use. Sure it's like 50 years but sooner or later it will loose it's value. With inflation, it will be a LONG time before that happens.

The way I look at it is I take the cost to buy the points, divided by the number of years then I add the annual fee to arrive at what I consider to the the real vacation cost per year. Even considering it this way, the cost per night in a studio is hard to beat. Plus when you check out there's no taxes added to your bill. I'm not sure what the rate in FL is but it is generally around 10%.

I bought in at SSR and my only regret is that I didn't buy more points to start with. I have bough two additional contract and am considering buying another resale. I'll have enough points that I will be able to rent points and cover the entire annual fee costs for the points I will use personally. At least that's what I'm telling myself.

 

[BWV Dreamin]

Historically at least, contracts bought 15 years ago hold close to the same value per point, adjusted for inflation, as they did when they were purchased.

Saber sums it up nicely, in that it is NOT an investment, but a prepaid vacation plan, and that if you can recoup the unused portion of the contract, you're really ahead to begin with.

I disagree with the assessment, however, that you will not be able to get @$100 per point in 20 years (close to what contracts are going for), simply because based on historical inflation rates, that $100 per point today will be almost $180 per point in 2027 if inflation remains relatively constant.

Again, that $180 will have the same purchasing power of $100 today, but thinking about it that way, it wouldn't be inconceivable for resale contracts, subject to dozens of unknown factors, to be selling for $130-$145 per point (or about 75% of a 'new' point).

In the end, the point I make is that even people who bought into OKW in 1990 at $48 per point and are selling their points now for $77 aren't gaining any purchasing power. Their cost per point is simply being recouped around 100% of value, adjusted for inflation.

Very nicely put! We won't have to wait til 2027 to see those high per point contract prices.....you can bet they are gonna start right off the bat with CRV, GCV, and of course Hawaii.

 

[Mtnman44]

Good Advice in this thread. No, you are not crazy. However, Some timeshares can be a huge scam, depending on the circumstances. However, if you travel regularly to WDW and enjoying staying "on property" then DVC is definately NOT a crazy idea. You just have to understand what it is, as has been well explained in this thread. Looking at is as "pre-paid" vacation lodging is a good way. You are giving up your cash now as a hedge against the inflation of hotel costs at WDW for the next 50 or so years. There are no absolutes. Will it hold it's value? Probably, in proportion to the lease life. Will WDW hotel accomodations continue to rise in cost over the years (making your DVC a smart decision)? Probably. If you think you will vacation there for about the next 20 years and will then want to sell, will your contract sell for a loss, a break-even, a profit? Hard to say, but it will likely sell for a good chunk of change no matter what, and you will still have 20 years of low priced vacations under your belt at that point.

 

[carlbarry]

I think everybody is missing two important points. Other timeshares, if bought from the seller, go for ten times what they can be purchased for from a re-sale. I see timeshares that someone paid $25,000 for selling for a few a hundred dollars. There is no ROFR there, so the shares fall to what the market demands.
Disney is different in 2 regards: first, the deed is not in perpetuity. It would seem that a DVC deed that has only a few years left will not go for as high a price. $17,000 for 160 points that last only 10 years amortize to a pretty penny per year!
Second, Disney retains ROFR. This keeps the price up, perhaps artificially. Suppose Disney changes this policy, or lowers what they'll accept? Prices would quickly go down.

 

[fatcat04]

For us it isn't so much that the points maintain their value but that they give us a value that we otherwise could not get. I hope we never have to sell our DVC points. I want to be 80 in my scooter puttering around MK, staying at AKV lol

In 49 years I will be paying the same for a fantastic hotel room that I do today. Can you imagine 50 years ago paying $10 a night for a room that today might cost you $100? And still getting that price today? Truthfully, I can't see room prices inflating like that just out of common sense BUT milk cost $.82 in 1950. Now it costs me $2+ so let's just say prices double. A room that you would book for $150 a night now would go for $300 in 50 years. That I can see. In 49 years my 8 points a night will still book that room.

That is why we bought in. A good value for us. Well and the fact that waking up to zebras outside your balcony is pretty cool!!

 

[BWV Dreamin]

Truthfully, I can't see room prices inflating like that just out of common sense BUT milk cost $.82 in 1950. Now it costs me $2+ so let's just say prices double.

Where do you get your milk? It costs $4.00/gal here in MD!!

 

[fatcat04]

Where do you get your milk? It costs $4.00/gal here in MD!!

To tell the truth and to jog the old grey cells, it has probably been since the spring since I paid below $3 a gallon for milk now that I think of it. I know I paid $2 something back in June I think it was and thankfully it hasn't hit $4 a gallon here yet!!! That is

 

[Charlesaway]

I think everybody is missing two important points. Other timeshares, if bought from the seller, go for ten times what they can be purchased for from a re-sale. I see timeshares that someone paid $25,000 for selling for a few a hundred dollars. There is no ROFR there, so the shares fall to what the market demands.
Disney is different in 2 regards: first, the deed is not in perpetuity. It would seem that a DVC deed that has only a few years left will not go for as high a price. $17,000 for 160 points that last only 10 years amortize to a pretty penny per year!
Second, Disney retains ROFR. This keeps the price up, perhaps artificially. Suppose Disney changes this policy, or lowers what they'll accept? Prices would quickly go down.

I agree that the contract will not go for as high a price, but again, remember, you have to keep in mind cost of living changes and inflation. The earliest any contract will have 10 years left on is 2032. $17,000 in 2032 dollars, if inflation continues at historical averages, is potentially equal to $7200 on 2007 dollars.

Some may not consider that a great deal, but let's assume it's a 160 point contract, which puts the annual 2007 maintenance cost around $700. This would give the person access to 160 points per year at roughly $8.75 per point, still below what points are currently renting at today. Their potential cost savings at this rate versus simply renting points is around $2000 over 10 years if they would have maintained the same vacation habits. Even today, this scenario could prove attractive to some people.

Your second point is much more poignant. If Disney waives ROFR, there would certainly be downward pressure on sellers and price could drop, even after adjusted for inflation.

But at the same time, if Disney choses to offer assement extensions on other resorts, even if the current owner doesen't buy in, it would extend the life and prolong the value of the resort, as a buyer in a resale situation could potentially purchase the extended access.

In the end, nobody will know until it happens. My personal belief is that the contracts will hold absolute value in relation to purchasing power well into their 'sunset years', and barring some unforseen deflationary pressure, the purchasing power of a dollar will continue to decrease.

Cheers

 

[BWV Dreamin]

I agree that the contract will not go for as high a price, but again, remember, you have to keep in mind cost of living changes and inflation. The earliest any contract will have 10 years left on is 2032. $17,000 in 2032 dollars, if inflation continues at historical averages, is potentially equal to $7200 on 2007 dollars.

Some may not consider that a great deal, but let's assume it's a 160 point contract, which puts the annual 2007 maintenance cost around $700. This would give the person access to 160 points per year at roughly $8.75 per point, still below what points are currently renting at today. Their potential cost savings at this rate versus simply renting points is around $2000 over 10 years if they would have maintained the same vacation habits. Even today, this scenario could prove attractive to some people.

Your second point is much more poignant. If Disney waives ROFR, there would certainly be downward pressure on sellers and price could drop, even after adjusted for inflation.

But at the same time, if Disney choses to offer assement extensions on other resorts, even if the current owner doesen't buy in, it would extend the life and prolong the value of the resort, as a buyer in a resale situation could potentially purchase the extended access.

In the end, nobody will know until it happens. My personal belief is that the contracts will hold absolute value in relation to purchasing power well into their 'sunset years', and barring some unforseen deflationary pressure, the purchasing power of a dollar will continue to decrease.

Cheers

So insightful....might you comment on today's economic drag!!! If the dow drops anymore in the next two days, I might need to add on again! My contract passed ROFR when the dow dropped 500 pts. in one day!

 

[ElizabethB]

The prices will hold steady or increase so long as WDW is willing to exercise ROFR every time someone tries to sell below the price WDW wants to see. When WDW stops exercising ROFR, the timeshares will, IMO, decline precipitously in value -- just like all other timeshares. There already seems to me to be a surfeit of availability. OKW and SSR are regularly available for booking through CRO at discounted prices. And yet, WDW just keeps building DVC -- including, now, canibalizing existing hotel inventory in order to turn it into DVC. WDW would only do that if DVC were more profitable than hotel rooms. Bottom line -- WDW holds all the cards. The value of a DVC "investment" rests entirely with what WDW does now and in the future. I would assume WDW will exercise ROFR for as long as the DVC division wants to build and sell more units. Once they've saturated the market, that may well end.

 

[Dean]

Prices will go down at some point for ALL of the properties. Most RTU timeshares start to decline at just under 30 years. DVC may get some protection due to ROFR and the inherent demand of WDW but the inevitable will happen at some point. At first prices will just flatten as inflation marches on, then the prices will start to slowly decline over time. While ROFR has some affect, it has not been the major factor for much of the last 10-12 years though at specific times it has. My view is that the 2042 resorts are at or close to their peak and that the rate of rise for any new sales now will be a small fraction on what has happened in the past. I think we've already seen that with SSR in that sales were originally in the $70-72 per point range after incentives and one can buy in for little more than that now resale at that resort. IMO, one of the reasons for the increases in value we've seen in the past is due to the fact that DVC undershot the actual value and that they've made up the difference since for new sales well beyond that of simple inflation. My feeling is anyone looking to sell at some point and not hold until the end of the ROFR should sell by around 28 years from the end, that's around 2014 for the 2042 contracts.

 

[jcodespoti]

If you think about it, financially, almost all vacations are bad financial investments.


Joe in CT

 

[Cruelladeville]

In the end, the point I make is that even people who bought into OKW in 1990 at $48 per point and are selling their points now for $77 aren't gaining any purchasing power. Their cost per point is simply being recouped around 100% of value, adjusted for inflation.

Yes, we are able to sell our contracts for 100% of value, but you have forgotten that during that time we also have vacationed regularly. So I would coup all my money, and vacation too-- not many timeshares can make those kind of claims. I think Disney retains its value because of luxury, customer service, AND location. Most of the $1 timeshares are timeshares that have none of these attributes. Marriott, Hilton, etc. sell at approximately 1/3 less than their purchase price, due to lack of prime location. They also do not support the selling price, as Disney does, which tends to artifically inflate the selling price; rather, Marriott, Hilton, and others let the market dictate the selling price, which is a true measure of what the public feels each timeshare is worth.

 

[CPTJAK]

My view is that the 2042 resorts are at or close to their peak and that the rate of rise for any new sales now will be a small fraction on what has happened in the past. I think we've already seen that with SSR in that sales were originally in the $70-72 per point range after incentives and one can buy in for little more than that now resale at that resort. My feeling is anyone looking to sell at some point and not hold until the end of the ROFR should sell by around 28 years from the end, that's around 2014 for the 2042 contracts.

I think that it will interesting to see how much if any OKW resort prices differentiate between 2042 and 2057?

I also believe that a 15 year extension for BCV will significantly inflate its value perhaps even higher than AKL.

 

[OlderMan]

..Disney does hold its value!!

In July, I attended an "add-on" meeting at OKW.

The DVC sales rep asked us "How many of you have owned for 10 or more years?"

Most of us raised our hands.

His response was "You have made money!" And he's right.

Should we decide to sell, we should get at least $20 more per point than we paid and we paid about $55 or $60--maybe less??

Rember, it's a "pre-paid vacation" NOT an "investment."

 

[JimMIA]

Although it's true that DVC prices have risen over time, it would be beyond naive to assume that it will always be thus. There are simply too many variables, many of which have already been mentioned above.

I think it is very silly financial planning to consider DVC anything other than a prepaid vacation plan.

If DVC fits your needs for vacations, and you can afford the initial purchase price and the dues each year, then you'll be buying a good product. If the vacation plan itself does not provide the value, no level of logical gymnastics about making money will make it a good deal.