Future Recession: Which DVC resale Resorts drop fastest

[Mackenzie Click-Mickelson]

Even the "Great Recession" felt comparatively minor compared to what I've read of the 1920s

Yes but most of that has to be viewed from the lens of the time period the recession actually happened. It's no use comparing to close to 100 years prior, the entire way of living is completely different. It's also no use comparing to even the 80's strictly speaking about saying what I quoted above where a certain recession felt minor compared to X.

I think the effect vastly depends on what age group you're in when it hit and just what the recession was about. My mother, in-laws, etc were not really touched by the Great Recession largely because they had already had decades of homeownership, were well established in careers, etc. Certainly people were pushed out of their jobs who were older and had to start over again those were the people I was competing against trying to get a job at 22 but they were also protected to a degree by years worth of wealth building and don't read wealth to actually mean wealth just the concept of time you had to build your assets.

Those who were greatly impacted, outside of those who lost their home by in large because they truly couldn't have ever really afforded the mortgage, were Millennials just coming out of college into the job market. Those aren't the target market for DVC anyhow. Even Elder Millennials were slightly less impacted by those just coming out of college.

Conversely during the pandemic my mom was let go of her company she had worked for just a few months shy of 40 years because she was at least 55 in age and had worked for at least 5 years. Now that impacted her because the very early stages affected the 401K and then she lost her job months later. However, my husband and I became one of those who positively impacted by it due to a job change as the engineering market here is competitive and there was fortunate ability to change jobs with much better pay.

DVC, even if you consider the debt people may take on to get the contract, are still largely of a different category of people that may not be representative of someone else when discussing the severity of a given recession. Vacations tend to drop off first but with a timeshare type program it's also not the same vacation that others are.

 

[Mackenzie Click-Mickelson]

Hawaii flights are cheaper than park tickets...

at least from the west coast.

I wonder where in terms of continental U.S. the owners of DVC come from but not only that where they come from when they use their points most often.

If the primary amount of owners or points users come from the west coast (when speaking about continental U.S.) that probably helps but if that's not the case then the airfare equation can greatly matter.

In the end though I think a big factor is how many points Aulani costs. My DISer friend who lives in my area opted to not do their normal 2 per year WDW trip in order to go to Aulani due to the points costs and room type they wanted, they own multiple contracts with a decent amount of points. The other person who has DVC didn't fly to Aulani from the west coast although that's where they grew up, they flew from where we are in the middle of the country and from FL to get to Hawaii (when they lived in each respective place). They never went to Aulani when they lived on the west coast.

 

[Maria_Ohana]

How do you think they'll drop? Why would one drop over another?

I'm going with OKW since it has 2042 expiration. Although I love the resort due to the size of the rooms. Next will be HHI and VB, just because of the dues.

 

[SugarSweetLee]

In a recession those park tickets won’t drop in price but the airfare will.

Are you sure about that? Disney has already proven they can move the needle when sales soften by offering various incentives like different cheaper ticket packages, dining offers, gift cards with purchase, etc. I'd expect more of the same if trip bookings really take a downturn.

 

[thanxfornoticin]

I'm going with OKW since it has 2042 expiration. Although I love the resort due to the size of the rooms. Next will be HHI and VB, just because of the dues.

It's a mixed bag with OKW, since a decent percentage of those contracts are 2057. In reality, OKW, HHI, and VB have already been coming down in price over the past few years - probably due to their location and the 2042 expiration. Any economic downturns now will likely impact these resorts a little, but probably not that much. They're already getting pretty low on the resale market.

Here's hoping we don't actually need to find out what will happen - hoping at some point soon, the economy will stabilize and grow instead. I'm not optimistic right now, but always hopeful!

 

[Wedgeout]

Are you sure about that? Disney has already proven they can move the needle when sales soften by offering various incentives like different cheaper ticket packages, dining offers, gift cards with purchase, etc. I'd expect more of the same if trip bookings really take a downturn.

Sure about it? Heck No. They would most likely have to pivot but won’t want to. They could pull a fast one and raise everything. There will always be recession proof individuals. Salaries don’t change. Layoffs would be a bad look.

 

[Sandisw]

It's a hard question to answer. I think the better question is which resorts would people be most likely to be upside down on any financing - that is, they owe more than they could sell their DVC for, thus, would likely just stop paying their loans and dues rather than trying to sell it off. Without a doubt, that is probably RIV both because it is one of the more recent actively selling resorts and because of the steep drive-off-the-lot depreciation.

After RIV, well, probably the resorts that have been most recently in active sales - PVB/AUL/VDH/CFW are all in active sales, so any purchasers there who financed their entire purchase there could be underwater. Before that, VGF and CCV were the two most recent actively selling resorts. But, there have been flash sales for SSR/OKW/SSR/AKV in recent years where people may have financed a direct points purchase (and had similar depreciation hits as RIV), but one would think the number of owners at those resorts who are underwater is small in comparison to RIV.

What would be interesting is how many financed resale in 2022 when the prices were a lot higher than today.

SSR was going in the $120s for $130s. VGF up in the $170s to $180s.

Heck, I sold a BLT in 2021 for $189 on the resale market.

So, while direct buyers would be the bulk of potentially underwater on financing, there may be resale buyers too.

 

[bdrex28]

What would be interesting is how many financed resale in 2022 when the prices were a lot higher than today.

SSR was going in the $120s for $130s. VGF up in the $170s to $180s.

Heck, I sold a BLT in 2021 for $189 on the resale market.

So, while direct buyers would be the bulk of potentially underwater on financing, there may be resale buyers too.

I think our resale SSR was maybe $93 or so? pretty close to that and it was in 2024 I believe, about this time of year. So, yes those that purchased at say $125 that's a quite a bit of a loss. but it's all relative to contract size. Stil a 150pt contract is about $4500 difference

 

[intamin]

What would be interesting is how many financed resale in 2022 when the prices were a lot higher than today.

SSR was going in the $120s for $130s. VGF up in the $170s to $180s.

Heck, I sold a BLT in 2021 for $189 on the resale market.

So, while direct buyers would be the bulk of potentially underwater on financing, there may be resale buyers too.

After revenge travel was over the market really took a dip although I feel like it was the market basically just going back to normal. But jeez 189 for resale BLT. I think by the time I was looking at DVC in 2022 it was down to the 160s and it's price wasn't that dissimilar from VGF which was surprising to me and it seems like it's finally back to where it should be. I remember listening on DVC Fan they were pushing people to buy SSR in the 120s because they thought it was going to keep rising, no financial motive whatsoever of course

 

[kboo]

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 …

Or nicely folding aluminum foil to reuse for the next day's sandwich along with the brown paper lunch bag.

I don't think I am quite as old as you both (but I'm using a 100 year old guy as my avatar), my parents and inlaws were born during WWII in Asia, and ... we never used plastic sandwich bags because reusable aluminum foil was less expensive! We opened larger Christmas presents by gently undoing the tape (and using a minimum of tape when wrapping) so we could reuse the wrapping paper. We had to treat our brown paper bags with great care so we could use them multiple times...

We are obviously doing better than our parents did, but I do still save and reuse a lot of things "for the environment," and we have moved to reusable bags and storage containers for ... ahem ... the same reason.

I hear you on the logic that defaulted direct loans won’t hit the resale market, Disney will just take back the contract and sell them when the market allows. But two things:
1) Resale finance won’t get absorbed. Monera will take back contracts and flip them.
2) If people stop buying generally, the premium priced resorts stand to lose the most demand, especially the premium priced resorts with restrictions that devalue your purchase so quickly right away.
3) The Aulani argument makes a lot of sense. It’s expensive to get there. Those pricy airline tickets are the first casualty in a tight economy.

1. agree. One of my resale purchases was VGF from Monera back in 2017 or so; a VGF add-on in 2018 was a resale from an international seller who I heard had bought and financed on a cruise and then had to come up with money to close. They had upside down points, also, because they hadn't paid dues in a while. so it takes a few years for direct or financed purchases to have to get sold; first the owners will probably default on dues and monthly payments before realizing they won't be able to turn things around.

2. Also agree, and I wonder if Disney, if still in active sales, can just sell those as hotel rooms or packages, and still find a way to make things look okay-enough on the financial statements.

3. This is actually worrying me a bit. We are going to Maui for spring break (not a Disney trip, and fortunately the hotel and air were paid for back when fuel prices were low). But this has me wondering if/when we will get back there. Hawaii needs the steady tourist $ and after the 2 Kona lows I really feel for them.

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).

Different from my childhood, also, is the thinning of the middle class. We took middle class Disney vacations as a kid - piled into the station wagon and drove, stayed at a Days Lodge with a kitchen offsite, stopped off to visit friends and family who lived along the way. This doesn't seem to be the way most DVC-ers, especially recent ones, visit WDW any more. (Nor do we - the spirit of my mom and inlaws cringed when I got the LLPP for my daughter and myself on her birthday). I feel like CFW may have been DVC's bid to appeal to that disappearing middle class (sleeping 6 at a 1br price), but also if they don't sell out on points they can probably sell on a cash basis and still make decent 4.

United is projecting jet fuel could be basically 2x for the next 18 months already (even if the Iran war doesn’t continue) so we’re going to see fewer flights and higher fares across the board (book your flights now, people!) if he’s correct or even if he’s wrong but the other handful of airline CEOs agree.

this worries me too. not to mention certain areas of airspace being shut down at times because of certain operations in the area ...

“Research” From Gemini:
likely to be Financed: Poly, Riv and Grand Cal
HI likely to buy in Fl: Saratoga and AK
Recession proof: Grand Cal, Beach Club, Poly, and Bay Lake

I'm half thumbs up and half LOL. I think financed, especially recently financed, is going to get hit a bit. But Poly being "recession proof" has me laughing a little.

DVC, even if you consider the debt people may take on to get the contract, are still largely of a different category of people that may not be representative of someone else when discussing the severity of a given recession. Vacations tend to drop off first but with a timeshare type program it's also not the same vacation that others are.

Agree - even if most people don't internalize the cost of the dues when buying in, that is probably a steady rate of buyer's remorse/must sell across all economic conditions.

My wild *** guesses of biggest drops - based on wild guesses about mix of new owners and financing:

CFW (high dues, recent sales, no resales on the market yet)
RIV (although I am a direct owner) anyone who bought within the past 5 years and financed may be at risk. (As I said elsewhere, we bought at a decent rate and have had 7 years (starting in Dec 2019!) of great trips using every last point, so our "loss" is mitigated already.)
VGF (if anyone financed big chunks of points in 2022)
POLY (new buyers, and based on the # of resale contracts back in 2018ish)
BCV, BWV - 2042 and I think the resale prices have been a bit high lately. (when we bought BLT resale BWV and BCV were selling at around the same price per point, I think BLT was a little undervalued since Poly and VGF and then CCV were all shinier and newer by then)

 

[HyperspaceMountainPilot]

After revenge travel was over the market really took a dip although I feel like it was the market basically just going back to normal. But jeez 189 for resale BLT. I think by the time I was looking at DVC in 2022 it was down to the 160s and it's price wasn't that dissimilar from VGF which was surprising to me and it seems like it's finally back to where it should be. I remember listening on DVC Fan they were pushing people to buy SSR in the 120s because they thought it was going to keep rising, no financial motive whatsoever of course

I haven't looked in a year or more now, but I believe that (absent periods of major economic downturns) nearly all of the DVC resale prices kept gradually climbing over time-- they were often higher than direct prices several years earlier. I believe the introduction of resale restrictions (combined with the 2042 date in which number of most desirable SAP rooms for resale drops dramatically approaching) has already dramatically changed the DVC resale pricing landscape across the board, but many have not wanted to acknowledge it (and I think some of the major players in the resale environment are incentivized to downplay it).

SAP will get much less valuable/more difficult in about 15 years so I would expect to see more dispersion between the "where you want to stay" properties and the ones that people scoop up for extra points in 1 bedrooms. I know some people truly love OKW and SSR and don't mean to disparage them (and I personally use my VGF as SAP!) -- but I don't think that trend will be driven by any potential recession (or inflationary spiral).

I continue to think AUL is the greatest danger due to "high dues, many recent financed purchases" but maybe PVB could be greater *IF* AUL is so low that trying to sell to avoid foreclosure doesn't make financial sense or is impossible... whereas PVB is going to have many more long term and resale owners who can afford to sell at $100-130 and just want to get out ASAP (and it has much higher to fall from). With AUL already selling under $100, I assume a lot of us here would be tempted to scoop up more of it in the $60-75 as long as the entire economy doesn't melt down 1920s style.

 

[Sandisw]

After revenge travel was over the market really took a dip although I feel like it was the market basically just going back to normal. But jeez 189 for resale BLT. I think by the time I was looking at DVC in 2022 it was down to the 160s and it's price wasn't that dissimilar from VGF which was surprising to me and it seems like it's finally back to where it should be. I remember listening on DVC Fan they were pushing people to buy SSR in the 120s because they thought it was going to keep rising, no financial motive whatsoever of course

Was shocked when I got that offer and my SSR got taken on ROFR at $125!

But ebbs and flows happens and it really depends on where you are in terms of things if forced to sell.

So if any of those who bought when things were higher a few years ago and have to sell now, and financed, they might still be upside down

 

[airjay75]

and it has much higher to fall from

I was thinking about this with respect to all of the DVC resorts and whether it would play into things in a recession that put downward pressure on resale prices. Setting aside VGC, PVB is currently the highest resale priced DVC resort of the O14 resorts, followed closely by VGF. After that, I think BCV/BLT/CCV tend to all be bunched together, hovering somewhere between $130-$140 per point with some variation from month to month.

Once could see greater nominal dollar drops in resorts with high average resale prices simply because there is more room for those prices to drop. Even if VB/HHI were to drop to near zero, well, they weren't selling for that much to begin with. OTOH, if PVB drops by $50/point, it's still selling for over $100/point.

 

[JamJam2021]

I was so excited to come here and drop the AUL dark horse suggestion but you just barely beat me too it. It’s not just that it’s an expensive vacation to get to (for most visitors) it’s expensive to be at, and also, United is projecting jet fuel could be basically 2x for the next 18 months already (even if the Iran war doesn’t continue) so we’re going to see fewer flights and higher fares across the board (book your flights now, people!) if he’s correct or even if he’s wrong but the other handful of airline CEOs agree.

The only reason I’m not certain AUL (where I’m a direct owner, btw) will drop MORE than RIV is because it’s already dropped so much, it can only drop so much more… also, I think the fact that so many RIV buyers (presumably all direct with financing?) are underwater means we might see far less RIV on the resale market, with Disney quietly taking them back under duress and selling them with moderate incentives. PVB strikes me as another strong candidate (that has already been dropping a lot)— there are a huge number of points in the system and the gap between direct and resale is not so giant that people who bought at $180ish might not be willing to cough up $10-30/pt to resell at $130-150 and avoid a foreclosure.

The yen is also pretty weak right now. I'm going to guess that keeps a ceiling on aulani points and puts a damper on japanese tourism - especially if there's a recession. Even the duty free stores have to close in Hawaii.

With that said, I would love to pick up some cheap subsidized aulani deeds even if i use them as SAP.

 

[muppets3d]

I think it's pretty unlikely that we'll ever have a prices-crashing recession again. This probably goes without saying, but the powers that be seem to favor inflation over deflation. If anything, prices will soar in the next recession.

As long as countries are willing to buy our debt, that is certainly true. But that may not always be true.

 

[VGCgroupie]

The yen is also pretty weak right now. I'm going to guess that keeps a ceiling on aulani points and puts a damper on japanese tourism - especially if there's a recession. Even the duty free stores have to close in Hawaii.

With that said, I would love to pick up some cheap subsidized aulani deeds even if i use them as SAP.

Yes!

 

[VGCgroupie]

Questions from the questions:
Which resorts are most likely to be financed?

Newer properties. Poly, RIV. VDH.

Also to the Hawaii question, there may be a bunch of Hawaii locals that bought in Florida and don’t want to fly there anymore. What resorts did they likely buy?

Poly. I kid. I think Hawaii locals would be more apt to buy in CA. But if Florida I will go with VGF.

Maybe we flip the question- which DVC are most recession proof?

Depends on when the recession happens. Longer contract lifespans I think have a better chance. I say VGF is the big winner for recession proof.