DVC and The Great Recession of 2007-2014

[Wakey]

Disney has gotten more aggressive with ROFR, then could get even moreso if prices take a hit.

Direct sales could totally stall, since rack rates will be further discounted. The discounts they offer now are much less and fewer than they were in 2010

DVD are I suspect highly target driven- don’t hit targets and senior management is out. I suspect they hold few prisoners. I also suspect if revenues drop, budgets are mercilessly cut with staff layoffs and spending cut- Moonlight Magics would I bet go although discounts could increase as they try to encourage park spending.
If direct sales are drying up, there’s little chance they will be splashing out on resale contracts with no buyers. Not only is there he capital outlay, but dues to pay on unsold contracts.
History shows that last recession, ROFR dried up.

 

[Wakey]

So jealous of all you folks scoring contracts 2010 - 2012... wonder if there will be a repeat in 3 - 4 years time from now. Keep my powder dry for 2022 - 2024 lol.

The big surge in prices is relatively recent. I picked up an SSR in 2016 for $75 a point, of which it was fully loaded with banked points I couldn’t use. I rented them out, and still had a contract with current years’ points on it, and it cost me a net $62. Not as good as Doug’s deal but a veritable bargain compared to the $103 I’ve just paid on another.
They have dropped a bit this year compared to last which was peak peak.

 

[DVC Doctor]

So jealous of all you folks scoring contracts 2010 - 2012... wonder if there will be a repeat in 3 - 4 years time from now. Keep my powder dry for 2022 - 2024 lol.

I doubt it, but you never know. Besides, it is easy to look back, but in that time NOBODY wanted to buy a timeshare as they were too scared and did not want any financial risk. But consider the following as a better plan.....

Lets assume you want until 2024 (that means you are losing out from 2019-2024 (5 years) and IF you bought SSR resale now for $100pp and then rented your points for $14pp for the next 5 years, then the $7pp profit over 5 years would reduce your SSR purchase by ($7 x 5 years) $35pp and your NET cost would be $65pp. That is a great deal now and will be an even greater deal in 2024.

So, it is not just buying for the lowest total price, it is buying for the lowest NET price.

 

[emchen]

I doubt it, but you never know. Besides, it is easy to look back, but in that time NOBODY wanted to buy a timeshare as they were too scared and did not want any financial risk. But consider the following as a better plan.....

Lets assume you want until 2024 (that means you are losing out from 2019-2024 (5 years) and IF you bought SSR resale now for $100pp and then rented your points for $14pp for the next 5 years, then the $7pp profit over 5 years would reduce your SSR purchase by ($7 x 5 years) $35pp and your NET cost would be $65pp. That is a great deal now and will be an even greater deal in 2024.

So, it is not just buying for the lowest total price, it is buying for the lowest NET price.

This is excellent advise. I will probably do that when kids are out of the house to get into the black on my contracts!

 

[Boardwalkin]

We were fortunate to purchase a 150pt BWV contract for $55 per point in 2011. In hindsight we wish we would have bought more as there were plenty available, but at the time we had no idea how high prices would be 8 years later.

 

[Goofy DVC]

We bought in at OKW in 1993.
We did add on several times thru the years.
Our Best Buy was in 2010 when we bought BCV for $76 a point with seller paying MFs.
I will add that prior to those tough economical years many on the boards shared that they were chomping at the bit to buy if there was a recession. Once the downtown started though it was a whole different story. You really don’t know what you will do until faced with the realities of a situation.

 

[emchen]

Looks like the sweet spot was 2010 - 2011.

(snip)
I will add that prior to those tough economical years many on the boards shared that they were chomping at the bit to buy if there was a recession. Once the downtown started though it was a whole different story. You really don’t know what you will do until faced with the realities of a situation.

Excellent point @Goofy DVC!

 

[ziravan]

We bought a weirdly loaded but loaded BCV contract in 2014 for $84/point.

Was listed at $86 and we offered $84 which was accepted.

In hindsight, that’s a great deal.

At the time, we played out scenarios for whether it was worth it to us if prices would fall through the floor.

At any given price point, there’s risk on either side. That’s what makes the price what it is; the price is the balance tip of the market between buy risk and sell risk, more or less.

And we thought hard about it. And. Pulled the trigger.

Now? One of the best purchases we ever made. In hindsight...

You can tell by my join date in 2014. I joined the forum to research buying DVC. And every time I see someone ask a question like, “Can I combine SSR and BCV points to book BCV at 11 months?” - I think, yup, that was me then...

 

[Bearval]

I would disagree based on the last recession. Dean mentioned that an OKW contract made it through ROFR at around $25 per point during the worst of it. Other than a handful of BCV contracts, Disney dropped all ROFR activity for around 18 months or so, IIRC.

It wouldn't make sense to me for direct sales to stall AND Disney to ramp up ROFR activity at the same time. Around 2008, Disney didn't want the inventory sitting there if buyers were scarce (and cash rentals weren't booming either, I'm sure.)

(Of course, in 2007-2008 we also had a spike in gas prices and I think Disney had a bit of a cash crunch as they hit a wall with securitizing their timeshare loans.)

My theory is that Disney's economic models will spot trouble before most Disboarders. As demand collapses, Disney will again drop 99% of their ROFR activity to avoid being stuck with too many contracts. Most of us will be too concerned with job uncertainty to pick up more DVC, even if it's a great deal. We'll see.

You also have to remember that the owner of the contracts still have to pay the yearly MF. DVC would not want to be stuck with a bunch of contracts they cannot sell nor cannot rent out during a recession.

 

[SarahInMN]

This post got me curious so I pulled our BCV contract. What a steal! 150 points at 84$ per point. Fully loaded, purchased resale 10/2009.


Edited to add:
9/2013, we bought 200 VGF points direct at 152$ per point. Compared to buying direct now or trying to pick up a Floridian resale, I’m fairly happy with that price point. Not as happy as with BCV but whatevs.

 

[moericus]

Economists always predict doom and gloom. It's part of their shtick. Enjoy the ride but don't get too greedy folks. We'll be fine.

 

[AvidDisReader]

Bought BLT direct in 2009, but after spending a week at AKL my wife was hooked. We received an email when AKL was announcing they were offering a special due to about to be sold out. So for her birthday, I bought 100 points direct. The thing is, you cannot do much with 100 points since we usually go with one of our kids family. Ahh for 2017, picked up 160 points at AKL resale for $84 pp-had first called Disney and they wanted $160 pp at which time I told them they were crazy. That resale purchase by far the best DVC purchase I have made.

 

[DVC_HK]

Right now we are saving away in case of another recession but my DW and I were very lucky to find positions right out of college that are recession proof. Hate to say it but if it comes to happen i'm gonna jump on these deals. No way in this world would I wanna pass it up

 

[emchen]

Keep that powder dry!

 

[Brancaneve]

Great topic! Thank you!

What we saw after the collapse, was a shift in the type of spending that people are doing. Americans may have stopped purchasing things but were using their funds to purchase experiences. DVC, Disney vacations, etc. are experiences through and through.

With the advent of Instagram and other types of social media, people are eager to share the things they are "doing" rather than the things they are buying.

So...even with a recession, will people continue to travel and cut back on other areas? Of course, a job loss is tragic and severe. At that point, traveling is out of the question. However, insecurity of the market and economy might not make a difference in this realm.

 

[mamaofsix]

Well, this is certainly an interesting thread to read in light of recent events.

Now the question is: will this current situation result in even better deals than the last time? Time will tell!

 

[SeaDis]

Well, this is certainly an interesting thread to read in light of recent events.
Now the question is: will this current situation result in even better deals than the last time? Time will tell!

Two blogs of interest this week for April activity with one broker. I've seen them posted in other threads so these may be repeats for many.

Key points:
1) April prices dipped slightly 3.1%
2) NO buybacks on their listings in April. Last one was March 30th.

I would guess there were fewer transactions overall. But the lack of buybacks is a flashing yellow, I think.

https://www.dvcresalemarket.com/blog/dvc-resale-average-sales-prices-for-april-2020/
https://www.dvcresalemarket.com/blog/dvc-right-of-first-refusal-report-rofr-april-20-report/

 

[dvcterry]

"Those who cannot remember the past are condemned to repeat it."

With talk of a looming recession, I began to search the forums for member experiences through that time, hoping to gain insight into how they handled it.

I wonder how many owners stuck through the housing crisis and subsequent recession ca. 2007? Did you sell, did you buy more, did you rent out your points? I bet there are stories to be told that many of us would love to hear and learn from.

I did a little background reading that taught me prior to 2007, DVC was comprised of Old Key West, Board Walk Villas, Beach Club Villas, and Villas at Wilderness Lodge, Vero Beach Villas, Hilton Head Island (2042 group). Interestingly, Animal Kingdom Lodge, Bay Lake Tower, Saratoga Springs Resort, Aulani, and Villas at Grand Californian (>2057 group) all were children of The Great Recession, all beginning sales within the first 3 years of the collapse.

The direct cost graph took no dip, probably because opening sale prices factored the recession in! It is arguable that resale prices took a hit, but that's where old-timers come in and tell us anecdotal info.

DVC members, if you bought in before or during the last recession, sold or re-bought through the collapse, please share with us your stories...

I bought pre-recession 2002 through the Recession. Bought multiple resorts, small contracts. Held onto them. I sold one small 25 pointer post recession. When I got the call I thought it was just a confirmation of receipt of my paperwork or an error or omission. It was an offer. I was happy but and it was also bittersweet. Yes, what I bought per point over the years versus sold it for was more, but I did not buy to sell or rent down the road. Don't live beyond means, enjoy life. Points in 02 were $75, selling in 17 for $135 pp, but purpose of DVC for me was to vacation with my family.

 

[emchen]

Well, this is certainly an interesting thread to read in light of recent events.

Now the question is: will this current situation result in even better deals than the last time? Time will tell!

100% agree, time will tell.

I for one will be watching closely. I’ve learned from this thread that the impact on the DVC market will be lagging the real economy not by months but years. If COVID19 has a short / limited effect (bounce right back economy) then there will be minimal effect on DVC prices. If the recession is prolonged or becomes a depression, then the bottom of the DVC market will be long and deep, perhaps more pronounced than that of ‘08-‘014.

 

[itutorfortravel]

Wow, we bought our DVC in 2014 and got an amazing deal. The prices at that time were unreal. If they fall like that again, I may be adding on!