Future Recession: Which DVC resale Resorts drop fastest

[disneylandtour]

Sure, not really a hot take though. There have been several $100 or less already for RIV.

I know. This was in reaction to someone saying that there's only one there now, under $100.

 

[disneylandtour]

And will the rental market go down concurrently with Disney cracking down on commercial renting? If Disney needs more room reservations in bad times that might be when they move to eliminate the commercial renting.

From what I've seen, the current plan didn't depress commercial renting by much. It maybe scared away a few regular DVC owners with the scary language, but it did nothing to move the needle on actual commercial renting.

 

[jcolvin5]

I know. This was in reaction to someone saying that there's only one there now, under $100.

Sorry, I may be categorized as a defensive RIV owner

 

[maui22]

Derek of dvc show has talked about having to tell people he couldn’t sell the recent RIV financed contract because they would need to bring more money to the table than they could afford. It’s sad but things like this happen.

All resorts are at risk though.

To give an idea of how any resort can be hit, during the Great Recession there were some who put in lowball offers and bought BWV in the 20s/pt. They boasted about renting for several years and already doubled their money relatively quickly. The potential of Disney cracking down on renters may scare some of the big buyers off today.

 

[Sandisw]

I went through RIV on DVCforLess last week. There was three at $110 or less. And only one was a whale of a contract. Presently there's another 9 contracts between $111 and $115. I fully expect to see RIV resale under $100 by the end of the year.

DVD has taken some back at those low levels so it will be interesting to see if that continues if prices fall to the levels you believe they will.

 

[gvel]

and if it got to around 90 I'd be very interested if I could get my wife on board... My view is the high points chart will depress the resale price even further due to the restricted nature of the resort. You need so many of them, and you can't use them to stay at resorts that are cheaper...

This is a great point many overlook. It is not just restricted, but restricted to a very expensive point chart. I think RIV will resale for the same as SSR within 5 years.

 

[jcolvin5]

Restricted, high point chart and it’s a niche resort even within the niche DVC product. Almost Disney adjacent.

 

[Cfabar1]

Restricted, high point chart and it’s a niche resort even within the niche DVC product. Almost Disney adjacent.

it would be less of a niche in my wife's view had they used real marble...

 

[Carouselofplanning]

The financed contracts - direct and resale, will be the first to go in a bad economy. I’d imagine there’s a larger percentage of direct financed given the premium in price.
The bulk of those are from resorts more recently made available for sale (inflated charts make you buy more points and they have high per-point pricing) and the owners are further away from reaching payoff.
In conclusion it’s likely RIV that drops the most when you combine this factor with the resale restriction devaluation effect.

 

[airjay75]

The financed contracts - direct and resale, will be the first to go in a bad economy. I’d imagine there’s a larger percentage of direct financed given the premium in price.
The bulk of those are from resorts more recently made available for sale (inflated charts make you buy more points and they have high per-point pricing) and the owners are further away from reaching payoff.
In conclusion it’s likely RIV that drops the most when you combine this factor with the resale restriction devaluation effect.

A direct RIV owner who financed is probably the most likely to be underwater on their loans, and potentially quite significantly. Someone who financed resale (or one of the O14 resorts direct) shouldn't be too underwater unless prices on the resort they financed drop significantly (which could obviously happen in a recession). And, if you're really underwater facing economic difficulty, I think you just stop paying and let Disney foreclose. So, those contracts probably never even hit the resale market.

Whether that has any impact to average RIV resale prices during a recession? Who knows. You could argue that, since those contracts never hit the resale market, the supply of RIV resale contracts during a recession might not increase the same way they might for resorts where owners might not be upside down on any loans. But, would that really ameliorate the downward pressure on RIV resale prices during a recession? I doubt it.

 

[IsDVCForMe?]

Riviera would dropppp

 

[DebbieB]

From what I've seen, the current plan didn't depress commercial renting by much. It maybe scared away a few regular DVC owners with the scary language, but it did nothing to move the needle on actual commercial renting.

I called Member Services yesterday to merge 2 reservations, before I talked to anyone, as I was going through the prompts, there was one that you agree that reservations are for personal use. That kind of shocked me. I’ve never rented, nor do I intend to but I always had it in the back of my mind that I could if necessary (cancellation).

About merging reservations, I originally emailed and I got an email back that it had to be done by phone or chat. That was new. I called and they put me on hold and did it right then.

 

[atthebeachclub]

I've been expecting a real honest and truly bad recession for my entire adult life, and somehow it's never happened. Even the "Great Recession" felt comparatively minor compared to what I've read of the 1920s. So....if we actually get a truly bad recession, I'll be shocked and surprised as I've expected one for so long and it just doesn't ever happen.

So I guess I'm going to vote that it doesn't happen in spite of everything going on, and all the things I would expect to naturally happen in such an event, like Riviera and Fort Wilderness dropping to small amounts in the resale market, just never happen.

 

[JamJam2021]

True recession? I’ll vote for aulani gets hit the worst. People gotta fly to Hawaii and that’ll stop during recession.

All the other dvc locations can at least be used by locals driving.

 

[Mirabell Rose]

True recession? I’ll vote for aulani gets hit the worst. People gotta fly to Hawaii and that’ll stop during recession.

All the other dvc locations can at least be used by locals driving.

Excellent point

 

[JamJam2021]

Excellent point

There is an assumption here that aulani is owned by mostly non-locals. I’m guessing that’s true but I might be wrong

 

[mkatsy]

I've been expecting a real honest and truly bad recession for my entire adult life, and somehow it's never happened. Even the "Great Recession" felt comparatively minor compared to what I've read of the 1920s. So....if we actually get a truly bad recession, I'll be shocked and surprised as I've expected one for so long and it just doesn't ever happen.

So I guess I'm going to vote that it doesn't happen in spite of everything going on, and all the things I would expect to naturally happen in such an event, like Riviera and Fort Wilderness dropping to small amounts in the resale market, just never happen.

I’ve been preparing for financial collapse since 1970 I’m much older than the rest of you and therefore raised by parents that lived during the 1920’s … what a fun bunch they were! I stop short of washing and reusing my plastic sandwich bags, but I’ve seen it done! IYKYK …

 

[airjay75]

I've been expecting a real honest and truly bad recession for my entire adult life, and somehow it's never happened. Even the "Great Recession" felt comparatively minor compared to what I've read of the 1920s. So....if we actually get a truly bad recession, I'll be shocked and surprised as I've expected one for so long and it just doesn't ever happen.

So I guess I'm going to vote that it doesn't happen in spite of everything going on, and all the things I would expect to naturally happen in such an event, like Riviera and Fort Wilderness dropping to small amounts in the resale market, just never happen.

https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States

Your post got me googling history of recessions - particularly interested in how recent ones measure up in terms of GDP declines. Setting aside COVID, you actually have to go back to the 1930s and 1940s to find recessions that had double digit GDP declines. And, since 1945, the only one that broke 5% was the 2007-2009 "Great Recession." The COVID recession was quite large at a 19.2% decline in GDP - in terms of a percentage decline in GDP, that is actually the largest since the Great Depression. (Of course, assuming all those stats on wikipedia are correct).

I go back to my earlier comment - I feel like recent recessions disproportionately affected lower and middle income classes. COVID hit service workers the most. The white collar class just got to work at home in their pajamas for several years. People left the job market and never came back. And, when the economy got roaring again and inflation got going for the first time in 40 years, it was again those with the least disposable income that got the squeeze. The upper middle and upper income classes probably shifted some of their expenses or skipped vacations for a few years, but they stayed put in their homes locked into historically low rate mortgages.

Back to 2007-2009, sure, there were plenty on Wall Street who lost their jobs, but those who really got smacked were those with mortgages where they were suddenly upside down and had little choice but to the let the bank foreclose. The upper income classes cut back for a few years, and Wall Street found other ways to keep making money other than securitizing mortgages and other debt (although they still do plenty of that).

But, notably, these two recent recessions were really quite significant historically in terms of percentage GDP declines.

Assuming that sort of trend continues, I don't think DVC is completely immune from the effects - I'm sure there are plenty of solidly middle class folks who go into debt for DVC. Even looking at the latest DVC News article on direct sales - of the 5.7M RIV points sold to date, a little over 100k have been taken back through foreclosures - but, that's less than 2%. Maybe that pops up to 5-10% during a recession?

So, who knows what the future holds, but I don't think the prediction that we just won't see huge declines in DVC resale prices is an unjustified one.

 

[Patmcpsu]

Assuming that the war continues, I see the macroeconomic results being similar to the post-covid stagflation. The K-shaped recovery has been pretty good to DVC, even as lots of people are struggling.