DVD and recession

[Mumof4mice]

Do you think prices are likely to come down to 2011 levels if the economy goes into recession again?

Reading old threads and daydreaming that I stopped and talked to the CM at those DVC booths instead of hurrying off to avoid talking to "timeshare people"...

 

[rg35]

I figure prices would drop, but not to 2011 levels.

With apologies to potential resale buyers though, I hope that we do not see another recession like the one triggered by the subprime lending crisis.

 

[Kim Gillihan]

I figure prices would drop, but not to 2011 levels.

With apologies to potential resale buyers though, I hope that we do not see another recession like the one triggered by the subprime lending crisis.

amen... id rather pay these prices than go thru that!

 

[chalee94]

I figure prices would drop, but not to 2011 levels.

Depends on how bad the recession is. When people start losing jobs and their investments tank, they start looking to sell whatever has some value left. Around 2008, an OKW contract supposedly sold for $25 per pt without ROFR and I'm sure there are similar stories about other resorts (probably not BCV)...

 

[Mumof4mice]

Depends on how bad the recession is. When people start losing jobs and their investments tank, they start looking to sell whatever has some value left. Around 2008, an OKW contract supposedly sold for $25 per pt without ROFR and I'm sure there are similar stories about other resorts (probably not BCV)...

$25 I was thinking 2x what we spent on Disney accommodation during that period would have gotten us a good sized contract. Correction, it would have been a C#$& load of points!

 

[Debbie Jean]

$25 I was thinking 2x what we spent on Disney accommodation during that period would have gotten us a good sized contract. Correction, it would have been a C#$& load of points!

This assumes that you are immune from the effects of the recession and not the person needing to sell for $25.

Whenever I see the "if there is a recession will DVC prices fall" threads, I have to chuckle because the assumption is always that someone else is going to take the financial hit.

 

[lovin'fl]

And I don't see a recession on the horizon anyway.

 

[Bing Showei]

And I don't see a recession on the horizon anyway.

Outside of a handful of people like Michael Burry, how many people saw the last great recession coming?

ETA: I'm not even sure he and others who shorted the housing markets foresaw the magnitude to which that would cascade into a global economic recession which that had far greater potential to destroy world economies than what actually unfolded.

 

[Minniesgal]

Outside of a handful of people like Michael Burry, how many people saw the last great recession coming?

ETA: I'm not even sure he and others who shorted the housing markets foresaw the magnitude to which that would cascade into a global economic recession which that had far greater potential to destroy world economies than what actually unfolded.

Many many people had been saying for years that the living on credit was unsustainable and going to lead to disaster. And for what it's worth i don't think it has stopped and it has veery possibility of happening again.

 

[Bing Showei]

During the last major recession, the only people who lost their shirt were the ones who had to sell. This was true for equities, real estate, and DVC. Say you bought resale in 2008 at SSR for $65/point. One of two things happened during the great recession when prices effectively dipped to $30/point for SSR: one, you either couldn't afford the ADs on the contract, and you had to sell; or two, this was something you could afford to hold onto, and you just plugged along like any other year paying your bills.

That is to say, this:

This assumes that you are immune from the effects of the recession and not the person needing to sell for $25.

It's why people beat the "luxury purchase" drum over and over and over again.

Even in a dip, putting your money into DVC as an "investment" would be foolish. At its nadir in 2009, any dollar you put into an index fund instead, would have grown to 4x today. Add in reinvested dividends and no historic low DVC contract could beat it.

And with THAT said, I would argue buying more add-on points, or buying into DVC at all during the great recession, because you want to spend more time waiting in line to hug a plastic-headed mouse, is actually a much smarter purchase than as an investment.

For those who would point out all the happy memories they made buying in, you're actually making my point for me. If the economy is hemorrhaging jobs, your 401k gets obliterated, and your kids' 529 is halved, but you are able to take your family to Disney to have breakfast in a fake castle at 7:00am so you can sneak past rope drop for 7DMT, that's textbook luxury.

 

[kboo]

Outside of a handful of people like Michael Burry, how many people saw the last great recession coming?

ETA: I'm not even sure he and others who shorted the housing markets foresaw the magnitude to which that would cascade into a global economic recession which that had far greater potential to destroy world economies than what actually unfolded.

(one could argue that they contributed to/accelerated it... <--- based solely on watching and reading The Big Short. )

This assumes that you are immune from the effects of the recession and not the person needing to sell for $25.

Ha. Very true. Stranger things have happened, but DH and I are in recession-proof jobs, thankfully.
(Aside - we actually benefited from the subprime mortgages when we refinanced in 2006-2007 ... For the last 10 years our mortgage was interest only at a ridiculously low rate, so our minimum monthly payment was $600/mo. We paid into it like it was a conventional mortgage and really knocked down the principal. Now we can't afford to move!)

 

[kboo]

During the last major recession, the only people who lost their shirt were the ones who had to sell. This was true for equities, real estate, and DVC. Say you bought resale in 2008 at SSR for $65/point. One of two things happened during the great recession when prices effectively dipped to $30/point for SSR: one, you either couldn't afford the ADs on the contract, and you had to sell; or two, this was something you could afford to hold onto, and you just plugged along like any other year paying your bills.

That is to say, this:

It's why people beat the "luxury purchase" drum over and over and over again.

Even in a dip, putting your money into DVC as an "investment" would be foolish. At its nadir in 2009, any dollar you put into an index fund instead, would have grown to 4x today. Add in reinvested dividends and no historic low DVC contract could beat it.

And with THAT said, I would argue buying more add-on points, or buying into DVC at all during the great recession, because you want to spend more time waiting in line to hug a plastic-headed mouse, is actually a much smarter purchase than as an investment.

For those who would point out all the happy memories they made buying in, you're actually making my point for me. If the economy is hemorrhaging jobs, your 401k gets obliterated, and your kids' 529 is halved, but you are able to take your family to Disney to have breakfast in a fake castle at 7:00am so you can sneak past rope drop for 7DMT, that's textbook luxury.

We cross-posted. We were one of the ones who just plugged along. Having that subprime mortgage (that we've been paying on) for the last 10 years has really helped us get a big leg up on retirement savings as well.

 

[rg35]

Yeah, thankfully we weren't really impacted by the recession. We bought our home in 2009 and got a low interest rate, refinanced a few years later at an even lower rate and switched from 30 years to 15 years at almost no extra monthly money. Then we bought DVC in 2012 and although the economic recovery was well under way at that point, resale was still a huge discount over direct. It all really just depends on the situation of the individual.

 

[Mumof4mice]

During the last major recession, the only people who lost their shirt were the ones who had to sell. This was true for equities, real estate, and DVC. Say you bought resale in 2008 at SSR for $65/point. One of two things happened during the great recession when prices effectively dipped to $30/point for SSR: one, you either couldn't afford the ADs on the contract, and you had to sell; or two, this was something you could afford to hold onto, and you just plugged along like any other year paying your bills.

That is to say, this:

It's why people beat the "luxury purchase" drum over and over and over again.

Even in a dip, putting your money into DVC as an "investment" would be foolish. At its nadir in 2009, any dollar you put into an index fund instead, would have grown to 4x today. Add in reinvested dividends and no historic low DVC contract could beat it.

And with THAT said, I would argue buying more add-on points, or buying into DVC at all during the great recession, because you want to spend more time waiting in line to hug a plastic-headed mouse, is actually a much smarter purchase than as an investment.

For those who would point out all the happy memories they made buying in, you're actually making my point for me. If the economy is hemorrhaging jobs, your 401k gets obliterated, and your kids' 529 is halved, but you are able to take your family to Disney to have breakfast in a fake castle at 7:00am so you can sneak past rope drop for 7DMT, that's textbook luxury.

We had to work very long hours to stay profitable during the recession. The managed funds were dumping their property portfolio at ridiculous losses (probably showing the income as "profit" to their investors after creative accounting massage) so all our resources went into that. Not wishing for another recession. But preparing for it so we can be in the same position when it happens again.

If we had bought DVC points instead of paying for the two vacations we took in the five year period, the thought of future holidays would have been enough to sustain us. No disrespect to anyone who had to sell!

 

[crisi]

Recessions are cyclical, and they happen about every six to eight years. The last one was in 2008 - we are overdue. Sometimes they occur for no apparent reason - the stock market "adjusts" from an unrealistic level, and over corrects, causing a loss of wealth, which makes more people panic and sell stock, which creates cash poor corporations who start laying off workers, creating a smaller market for goods........But I'm betting this one will be international trade driven.

 

[Dean]

Do you think prices are likely to come down to 2011 levels if the economy goes into recession again?

Reading old threads and daydreaming that I stopped and talked to the CM at those DVC booths instead of hurrying off to avoid talking to "timeshare people"...

Yes, if the recession is severe enough prices will drop. I think anyone should consider it if buying but I wouldn't wait to see if it happens before buying. One shouldn't buy a luxury item such as DVC unless they can lose the money and not feel it financially.

 

[Mumof4mice]

Yes, if the recession is severe enough prices will drop. I think anyone should consider it if buying but I wouldn't wait to see if it happens before buying. One shouldn't buy a luxury item such as DVC unless they can lose the money and not feel it financially.

Agree. We bought a conservative amount to try DVC out. If we love it, or if irresistible bargains started appearing in future, we'd jump in and really start shopping.

Haven't even closed on the contracts and I already have addonitis though! Can't stop checking listings.

 

[Dean]

Agree. We bought a conservative amount to try DVC out. If we love it, or if irresistible bargains started appearing in future, we'd jump in and really start shopping.

Haven't even closed on the contracts and I already have addonitis though! Can't stop checking listings.

I'm sure sure how many points you bought but for others, I'd guard against going too small going in. IMO it's rare for DVC to make sense currently at under around 150 points but there are exceptions. Many who buy smaller cut it too close because adding later in multiple smaller contracts raises cost with little benefit for most situations.

 

[Mumof4mice]

I'm sure sure how many points you bought but for others, I'd guard against going too small going in. IMO it's rare for DVC to make sense currently at under around 150 points but there are exceptions. Many who buy smaller cut it too close because adding later in multiple smaller contracts raises cost with little benefit for most situations.

Thanks. Yes, this being our first foray into timeshares, resalability was a consideration. But I'm already semi-regretting getting 2 contracts (both pvb) instead of a single larger one that could have lowered the cost per point down.

 

[Dean]

Thanks. Yes, this being our first foray into timeshares, resalability was a consideration. But I'm already semi-regretting getting 2 contracts (both pvb) instead of a single larger one that could have lowered the cost per point down.

You're there but for others reading, I'd consider the resale situation but in truth it really shouldn't be a large factor. One should never buy to resale (other than if one can flip it and make a quick reasonable profit). One should only buy a timeshare to use, esp someone newer to timeshares and only if it adds true value or savings, to buy just to be a member of the club without other benefits would be the definition of insanity. This idea of buying multiple contracts that are smaller (50?) to have resale options is ludicrous IMO if it costs reasonablymore to do so. There are times when it doesn't cost more and it can be a good option. I also think it's unreasonable for most situations to buy evenly worrying about legacy situations that are far into the future. But I would tend to keep the contracts under 300 points and I likely would do 2 separate contracts usually at 2 different resorts.