Future Recession: Which DVC resale Resorts drop fastest

[airjay75]

At first I thought a recession would impact all DVC resorts similarly (relative to the ppp), but I'm not so sure now.

I think the biggest factor is who owns the contracts today and how they were purchased.
Newer resorts that are still being actively sold direct (or were recently) likely have:
1) A higher percentage of financed purchases
2) Higher buy-in costs per point
3) In many cases, resale restrictions
That combination matters in a downturn.

If we hit a recession, DVC is a discretionary/ luxury asset. Owners who financed at higher price points are more likely to sell under pressure or be "foreclosed", resale restricted resorts have a smaller buyer pool on the back end. That creates both increased supply and reduced demand, which is what in theory drives sharper price declines.

Because of that, my guess is that resorts like RIV and CWF to be the most vulnerable.

On the flip side, older “legacy” resorts without resale restrictions and with lower cost basis (SSR, OKW, AKV, etc.) probably hold up better.
They have a broader resale market and less leverage in the system. Also, a 10% drop on a these properties will ultimately be substantially less than a 10% drop on Poly.

TLDR/
My guess is that RIV ane CFW will be affected the most. The structure of ownership and resale demand will matter a lot.

Just to play devil's advocate, one could also argue that those purchasing direct DVC in recent years are people with higher disposable income and, perhaps, higher net worth than those who have bought cheaper resale resorts like SSR/OKW/AKV. And, in recent history, upper middle income classes have been much less affected by economic downturns than middle and lower income folks. So, if that trend continues, they may well be much less likely to unload luxury purchases, especially ones that aren't particularly liquid and especially if they aren't personally feeling the effects of a recession all that much.

I don't necessarily think that. Just giving a different argument. Really, I don't think any of us can predict with a lot certainty how a recession will affect DVC resale prices, other than, yes, there will be less demand for vacations and presumably less demand for a product like DVC. And, there will be DVC owners who, if affected by an economic recession, may try to offload their contracts. Lower demand and/or increased supply - prices should come down.

Reminds me of the famous quote, "A recession is when your neighbor loses their job. A depression is when you lose yours." And, for a DVC owner, that's probably what it would come down to. A recession where you keep your job and maintain your general standard or living maybe with some cutbacks here or there? Meh, no big deal. You'll probably get through it.

A recession where you lose your job and face a significant degree of economic uncertainty in your own personal life? Yeah, your DVC ownership may well be getting the boot, and at that point, you're probably unlikely to care all that much about how much you get.

 

[IsDVCForMe?]

Heard of a statistic that ~25% of people go into debt to go to Disney. Wonder how many people go into debt for DVC?

 

[CraigInPA]

The first resorts to be shed in an economic downturn will be those with high maintenance fees like CFW. The rationale is to shed high monthly expenses in a recession and preserve cash. People will have fewer trips to the salon or the barber, make Starbucks a weekly treat instead of a daily visit, and downgrade their cable TV or cell phones plans. The group to watch, which will signal a deepening downturn, will be people who have financed, which are disproportionately newer resorts like CFW, RIV, DH, and Poly. At first, they'll rent their points, then sell their contracts. After that, as the downturn continues, you'll see more people looking to convert assets to cash, and then you'll see every resort has higher number of resale listings. At that point, it's a buying opportunity for those with the money to buy. The last big downturn depressed prices for several years. The last few small downturns depressed prices for about 6 months each.

I've gotten truly bargain basement pricing during periods of uncertainty. I'd love to be able to boast that I predicted where the nadir of pricing would occur, but I really just watched the market for a bargain price on my desired use year and resort, and then immediately went for it.

 

[RickNJane]

The first resorts to be shed in an economic downturn will be those with high maintenance fees like CFW. The rationale is to shed high monthly expenses in a recession and preserve cash. People will have fewer trips to the salon or the barber, make Starbucks a weekly treat instead of a daily visit, and downgrade their cable TV or cell phones plans. The group to watch, which will signal a deepening downturn, will be people who have financed, which are disproportionately newer resorts like CFW, RIV, DH, and Poly. At first, they'll rent their points, then sell their contracts. After that, as the downturn continues, you'll see more people looking to convert assets to cash, and then you'll see every resort has higher number of resale listings. At that point, it's a buying opportunity for those with the money to buy. The last big downturn depressed prices for several years. The last few small downturns depressed prices for about 6 months each.

I've gotten truly bargain basement pricing during periods of uncertainty. I'd love to be able to boast that I predicted where the nadir of pricing would occur, but I really just watched the market for a bargain price on my desired use year and resort, and then immediately went for it.

Very much agree. As disposable income dries up, expenses will have to be cut.

 

[Sandisw]

The problem with Riviera is resale is already about half of direct. If forced to sell, many owners may be under water on their loan.

That it true and it may mean that owners choose not to sell.

 

[airjay75]

The group to watch, which will signal a deepening downturn, will be people who have financed, which are disproportionately newer resorts like CFW, RIV, DH, and Poly.

This makes intuitive sense to me. When you purchase direct, they make financing quite easy. But, there isn’t really anything that stops you from financing a resale purchase either. And, unlike direct, you’re probably less likely to be upside down if you financed a resale contract which makes exiting much easier.

How that plays out during an economic downturn? Don’t know. Maybe direct purchasers try to rent their points just to cover the dues. Maybe they just let their contracts go and face foreclosure. They could list at a price that would enable them to pay off the loan, but probably not going to get many interested buyers. If they’re truly facing bad economic times, I think foreclosure seems the most likely path.

 

[juliebee]

So when a DVC financed purchase goes to foreclosure, does DVC take the financial hit? Do they take the points back automatically? I’ve never financed a purchase so I don’t know how that works. If they do get those points back, that would add even more inventory for them to try and sell in bad economic times.

Here is a quote from this article-

Since sales began for Riviera, Disney has reacquired almost 110,000 Riviera points through foreclosures, waivers in lieu of foreclosure, right of first refusal on resale transactions and buybacks. - https://dvcnews.com/dvc-program-men...direct-sales-stay-the-course-in-february-2026

I don't believe many of those points are from ROFR, so these are primarily foreclosures and waivers in lieu of foreclosure.

 

[airjay75]

Here is a quote from this article-

I don't believe many of those points are from ROFR, so these are primarily foreclosures and waivers in lieu of foreclosure.

I was just about to post that same article and line. Really interesting statistic they got there and I had the same thought - most of those 110k points are most likely not from ROFR.

Yet another benefit of the resale restrictions from Disney's perspective. They put downward pressure on resale prices which makes it more likely that people are upside down if they finance which means, an even cheaper way to re-acquire points and sell them back as direct points.

 

[atthebeachclub]

Heard of a statistic that ~25% of people go into debt to go to Disney. Wonder how many people go into debt for DVC?

I did. So do many people. I would guess half at least take on short term debt. I took a 15 year loan and paid it off in about six months. Had a plan and paid it off without much interest. But you can take a loan and pay it off over 15 years if you want, too.

 

[atthebeachclub]

My unscientific guess is that resorts where it’s difficult to rent your points for enough to cover both your remaining loan and your dues will see more foreclosures and good deals hitting the market. Because people without jobs will first look to rent their points out to cover their costs. So that will affect primarily newer resorts and/or those with a lot of resale turnover, especially those with high dues, that may be in less demand from a renter’s perspective. And the restricted resorts already face loss of value on the secondary market, so this will put some more downward pressure on their value. Restrictions suck for owners.

 

[TCRAIG]

The problem with Riviera is resale is already about half of direct. If forced to sell, many owners may be under water on their loan.

Good point