Here’s Why Resale Has Plenty of Room to Rise

[Bjaiken77]

I think DVC resale at certain resorts is overpriced today because I was planning to buy resale and instead bought direct.

We knew we wanted to buy 150 points. We liked Riviera but also liked Poly and were looking into resale if it would be a cost savings. Direct price we ended up paying was $195 per point. When we first started looking Poly was running around $150 per point on the resale market, so a little under $7,000 cheaper than RIV, which was pretty substantial but not cheap by any means. By end of April, the prices were more like $170-175 per point for Pol resale. So when it came down to it, we were looking at premium of $3,000 to $4000 for direct versus resale. That became a much tougher sell. Blue card benefits alone would add up to a decent chunk of that over time with discounts. And with resale, we faced the hassle of the long closing, during which time prices might only go up on both direct and resale and land us in a worse spot if we didn't pass ROFR. as well the downside that many contracts we were seeing did not have not have any points coming for a long time. Plus, it was a big issue to us that we wouldn't even be able to stay at RIV if we bought resale versus being able to stay at both if we bought direct.

That's just one person's story. I know the price "gap" looks larger if you compare Poly direct to Poly resale--but for people like us that think RIV is just as good, buying direct at Poly had no benefit over buying at Riv.

In other words, I think that resale at some resorts may be over priced to the extent that it steers people to buying direct at a different resort. That just removes buyers from the resale market, which is not a good thing for sellers.

You bring up a good point. Not only are you comparing the gap between resale and direct at the same resort. You are also comparing the gap between resale and direct at another resort. Sometimes, there is an adequate substitute that is on par with your first selection.

 

[smisale]

I'm glad i bought at AKL for 90 per point but now at 125+ don't think i would. I had the exact amount to pay cash and with the increase i would have to finance it and that for sure isn't worth it

 

[sugliac]

Interesting read... the fact that during the SS convo Pete was talking about $120s being cheap was shocking to me. I remember less than a year ago when you could snag a contract for below $100 (I know that it was in danger of ROFR but still)

 

[sethschroeder]

Yes, that is the definition of 'value' whether some like it or not.

Well people are throwing around a fairly vague term. Market Value is what is being describe about what someone is willing to pay for something.

Market Value can still be overpriced.

Example was another thread about timeshares where people buy a $50k-$75k contact that is worth pennies the next day. The market value of the new contract is $50k-$75k but it is overpriced since you can get the exact same product for much less.

This applies to DVC but slightly differently.

If Disney was selling points for $1000/point right now and a few people were buying some that would be market value. Thing its its still overpriced since you can easily go and just stay cash or rent for substantially less.

In addition market value is harder to define on something like DVC points since there is not just 1 or 2 but thousands of contracts and millions of points. A good example is the difference between VGF 1.0 and AUL where one sold out extremely fast and the other is still selling. So while people are buying AUL its much slower meaning that its current set price may be slightly to high or just that demand is low so the price is set accordingly for anyone who would buy anyways.

Long way of saying lots of definitions and views of "value".

 

[DisneyOutsider]

Very well said, much better than I’ve done. You articulated my original point:

Not selling today is the same as buying at today’s prices.

A person’s original buy-in price is immaterial to whether or not it is still a good value to buy, hold, or sell.

For me, I’m a current owner who thinks resale isn’t overvalued and I would buy at today’s prices, and therefore I’m not selling my contracts.

You're viewing this scenario as if DVC is a Security that you hold, looking for an eventual cash return. The truth is, it is not at all like that... it is much more like a Real Estate interest (well technically that's exactly what it is). If you own a home currently that has gone way up in value since your purchase, you could sell that home for a very nice return... but you're still going to need a place to live, or in the DVC scenario you still want to vacation at Disney. You're now looking for another home at today's prices, which means the value of your dollars has been eroded by the market.

When I made the decision to purchase DVC, I calculated an approximate $/night over the life of my contract. If I sell at a gain and immediately buy back in at today's prices, my $/night has just gone up and the value has thus gone down. If I decide to sell, it's because I think I have a much better use/value proposition for those gains other than DVC.

I would NOT buy back in at today's prices. I'm holding on to my DVC because it represents a good value for my Disney vacations that cannot be achieved in the current market.

 

[Drewski77]

You're viewing this scenario as if DVC is a Security that you hold, looking for an eventual cash return. The truth is, it is not at all like that... it is much more like a Real Estate interest (well technically that's exactly what it is). If you own a home currently that has gone way up in value since your purchase, you could sell that home for a very nice return... but you're still going to need a place to live, or in the DVC scenario you still want to vacation at Disney. You're now looking for another home at today's prices, which means the value of your dollars has been eroded by the market.

When I made the decision to purchase DVC, I calculated an approximate $/night over the life of my contract. If I sell at a gain and immediately buy back in at today's prices, my $/night has just gone up and the value has thus gone down. If I decide to sell, it's because I think I have a much better use/value proposition for those gains other than DVC.

I would NOT buy back in at today's prices. I'm holding on to my DVC because it represents a good value for my Disney vacations that cannot be achieved in the current market.

The internal equity that you have with DVC is based on what you could sell it for today, not what you originally paid.

Doesn’t matter if you consider DVC an asset or not, it has value if sold today, and that value is not based on what you paid.

Are you saying if your DVC points went up to $1,000 per point, and rack rates stayed flat, you wouldn’t consider selling because of your original buy in vs. rack rate?

Also, if you woke up tomorrow and didn’t have your DVC contracts, and instead had the exact amount to buy back in at today’s prices...I think you would.

As would I and many others, and therefore many DVC owners are not selling, thus limiting supply even at today’s elevated prices.

 

[MomOTwins]

The internal equity that you have with DVC is based on what you could sell it for today, not what you originally paid.

Doesn’t matter if you consider DVC an asset or not, it has value if sold today, and that value is not based on what you paid.

Are you saying if your DVC points went up to $1,000 per point, and rack rates stayed flat, you wouldn’t consider selling because of your original buy in vs. rack rate?

Also, if you woke up tomorrow and didn’t have your DVC contracts, and instead had the exact amount to buy back in at today’s prices...I think you would.

As would I and many others, and therefore many DVC owners are not selling, thus limiting supply even at today’s elevated prices.

I think what they are saying is that you have to subtract the cost of taking future Disney vacations against they cost of continuing to hold your DVC contract that allows you to stay for the price of annual dues once you've recouped the original outlay. Also, rack rates are almost never flat, they do go up pretty much every year--and while discounts were better during the pandemic, they've gone back down now.

I think the biggest issue I see now is with 2042 contracts. 5-10 years from now, resale buyers are going to wake up to the fact that they'll never get their money back with so little time left on the contract, and the resale market for those contracts will tank. So I think there is a very compelling argument that you should eventually sell those contracts, because when you are down to just 10 years of vacations left on the contract, the resale value may well be worth considerably more than the cost savings on future vacations.

 

[Drewski77]

I think what they are saying is that you have to subtract the cost of taking future Disney vacations against they cost of continuing to hold your DVC contract that allows you to stay for the price of annual dues once you've recouped the original outlay. Also, rack rates are almost never flat, they do go up pretty much every year--and while discounts were better during the pandemic, they've gone back down now.

I think the biggest issue I see now is with 2042 contracts. 5-10 years from now, resale buyers are going to wake up to the fact that they'll never get their money back with so little time left on the contract, and the resale market for those contracts will tank. So I think there is a very compelling argument that you should eventually sell those contracts, because when you are down to just 10 years of vacations left on the contract, the resale value may well be worth considerably more than the cost savings on future vacations.

I think you make an excellent point on the 2042 resorts and being prepared to sell before prices drop a ton.

I also agree that you want to calculate the cost of future vacations compared to holding your DVC contract...but that calculation should be based on what your DVC equity is today, not when it was bought.

Otherwise a person is comparing much higher rack rates to the same buy in price, which isn’t an accurate calculation.

 

[DisneyOutsider]

The internal equity that you have with DVC is based on what you could sell it for today, not what you originally paid.

Doesn’t matter if you consider DVC an asset or not, it has value if sold today, and that value is not based on what you paid.

Are you saying if your DVC points went up to $1,000 per point, and rack rates stayed flat, you wouldn’t consider selling because of your original buy in vs. rack rate?

Also, if you woke up tomorrow and didn’t have your DVC contracts, and instead had the exact amount to buy back in at today’s prices...I think you would.

As would I and many others, and therefore many DVC owners are not selling, thus limiting supply even at today’s elevated prices.

I mean.. that's just an outrageous scenario that really doesn't add anything of value to this discussion. If you really want an answer.. of course I would sell.. but I damn sure wouldn't buy back in to DVC with the proceeds. Your logic is a bit circular there.

And I previously answered the second hypothetical.. I said I would not buy DVC at today's prices. The $/night over the life of the contract isn't attractive to me. The points I currently own and paid for hold a better value.

I didn't buy a productive asset.. I bought a cost controlled room rate at Disney for the next 50 years.

 

[ldo]

a repurchaser viewpoint:
we sold AKV at $105 last July having bought at $80. It was a good decision then-we needed $ for home renos. We sold out house and, now, we are repurchasing at $125.
Things that made us repurchase: we are likely to go to FL area 4X/year and stay at DVC 2-3 nights each time. Staying in DVC studio is cost effective for us. I thought I'd just get a few points transfers, as I still have a very small contract, but wait time for MS is crazy, which makes a 3 way call to MS for a points transfer much more difficult. I'm also uncomfortable paying even 1/2 up front for a transfer. A points transfer costs double or more than annual fees. My contract came with some loaded points, which I mentally credit as the amount for a points transfer, and current UY points, which cost me $10 less after annual fees than an $18/point transfer. So, that knocks my purchase price down by about $15 IMHO, as I would have paid out real cash for those points transfers in the next 2 years. That's my mickey math!

 

[Ssplashhmtn]

I would NOT buy back in at today's prices.

I don’t think OP was suggesting buying “back in”. OP was discussing buying “in”, and I believe OP’s point is that if you felt today’s prices are a bad value (too high) for buyers, you would most likely sell at these high prices and utilize other options to stay at Disney properties.

Prices are high; but can be high and still be a good value vs available alternatives.

 

[iloveokw]

All good points but:

I am specifically referring to the person who says:

“I own DVC but wouldn’t buy at today’s prices because it doesn’t provide enough value...but I’m not selling.”

Let me try it this way:

If someone offered you $500 per point to sell today and you couldn’t buy back in would you?

No. We have sold about 1/2 of our points, but we bought where we want to stay. We enjoy our resorts more than the parks.

 

[Drewski77]

I mean.. that's just an outrageous scenario that really doesn't add anything of value to this discussion. If you really want an answer.. of course I would sell.. but I damn sure wouldn't buy back in to DVC with the proceeds. Your logic is a bit circular there.

And I previously answered the second hypothetical.. I said I would not buy DVC at today's prices. The $/night over the life of the contract isn't attractive to me. The points I currently own and paid for hold a better value.

I didn't buy a productive asset.. I bought a cost controlled room rate at Disney for the next 50 years.

So you would not buy at today’s prices because the $/night over the life of the contract isn’t attractive...and yet you are tying up the same amount of equity that today’s resale purchaser does, there is no difference.

I asked if you would buy back in if you woke up tomorrow and didn’t have your points but you had the cash to buy your points back at today’s prices.

I believe you would. And it’s why not selling today is in essence buying at today’s prices...because your points tie up equity based on today’s prices, not the smaller equity from when you bought.

While I bought my points far cheaper years ago, I wouldn’t hesitate to buy at today’s resale prices if I didn’t have my points. And apparently based on the increase in resale values I’m far from alone in this.

 

[Drewski77]

I don’t think OP was suggesting buying “back in”. OP was discussing buying “in”, and I believe OP’s point is that if you felt today’s prices are a bad value (too high) for buyers, you would most likely sell at these high prices and utilize other options to stay at Disney properties.

Prices are high; but can be high and still be a good value vs available alternatives.

Exactly my point, thanks for making it much better and succinct than I did!

 

[theww228]

I tried making this same argument 5 years ago when I joined and the old crowd told me I was crazy.
Good luck!!!

Same here many years ago. Never touched it again because of the responses from people who didn’t understand economic principles, but decided to get angry at the discussion. They wanted to argue their point from their emotional view. Many people also struggle with the fact that not making a decision is the same as making a decision. The fact is that status quo just doesn’t feel like a decision.

 

[smisale]

Same here many years ago. Never touched it again because of the responses from people who didn’t understand economic principles, but decided to get angry at the discussion. They wanted to argue their point from their emotional view. Many people also struggle with the fact that not making a decision is the same as making a decision. The fact is that status quo just doesn’t feel like a decision.

I think an opinion is and opinion just because someone disagrees does not mean they don't understand economic principles
now your labeling because they don't agree with you. Everyone has a view point that not for us to judge right or wrong just voice your side

 

[Drewski77]

Same here many years ago. Never touched it again because of the responses from people who didn’t understand economic principles, but decided to get angry at the discussion. They wanted to argue their point from their emotional view. Many people also struggle with the fact that not making a decision is the same as making a decision. The fact is that status quo just doesn’t feel like a decision.

I can see why you didn’t touch this subject again. I’ve been really surprised at the emotional reactions to this.

Perhaps some owners who bought at far lower prices are offended at the notion that they would buy at today’s prices, and that by not selling this is basically what they are doing.

It’s like the idea they are putting the same amount of equity into their DVC contracts as current resale buyers (they are) frustrates them.

Who knows, but probably best for me to leave this topic alone as well.

 

[Bearval]

I think what they are saying is that you have to subtract the cost of taking future Disney vacations against they cost of continuing to hold your DVC contract that allows you to stay for the price of annual dues once you've recouped the original outlay. Also, rack rates are almost never flat, they do go up pretty much every year--and while discounts were better during the pandemic, they've gone back down now.

I think the biggest issue I see now is with 2042 contracts. 5-10 years from now, resale buyers are going to wake up to the fact that they'll never get their money back with so little time left on the contract, and the resale market for those contracts will tank. So I think there is a very compelling argument that you should eventually sell those contracts, because when you are down to just 10 years of vacations left on the contract, the resale value may well be worth considerably more than the cost savings on future vacations.

When there are only 5-10 years left on the 2042 resale contracts ( with the exception of OKW) DVC will not be exercising ROFR and the prices will plummet down to earth. Not many people are going to buy a contract with 5 or less years left on it especially since you still have to pay closing costs. People who no longer want to go to WDW will be selling their contracts cheap to get out from having to pay maintenance fees or they will be renting out their points to pay for those fees.

 

[Nabas]

Trying to help with not missing the forest through the trees, not moving goal posts.

My point is, and I used an exaggeration to prove it:

There would be a price that would get more DVC owners to sell that previously wouldn’t have considered it, but we are not there yet so we have rising prices.

What someone would be willing to offer me for my DVC membership is somewhat immaterial.

What is more important is what it would cost for me to replace it.

If I was somehow offered a very inexpensive way to stay onsite as often as I would like, I’d sell my DVC membership in a heartbeat at the current price.

If you want to offer me $500pp, then I’ll sell it and buy a new DVC membership at $201pp.

If you tell me that the cost of all DVC memberships are going to be $500pp, then no one will buy them because they can stay onsite for less by paying cash.

If you tell me that cash rooms are suddenly going to triple in price in order to support the new $500pp price, then I am holding onto my DVC membership for dear life because it’s the least expensive way to stay onsite.

As long as I plan to vacation at WDW, and as long as my current DVC is the least expensive way for me to stay onsite, I will not sell.

 

[Lorana]

It’s like the idea they are putting the same amount of equity into their DVC contracts as current resale buyers (they are) frustrates them.

Except it’s not. I see what you’re trying to argue here - that because we don’t sell, and our DVC is currently worth X, that it’s like we’re buying for X because we aren’t making the profit by selling.

But it’s all a “funny money” argument, as we like to say in my family. It’s no different than considering someone’s net worth when it includes assets that haven’t been sold. Like, it’s great to say my house is worth $500k when I bought it for $300k, and that’s its like I’m paying $500k for it because I haven’t sold it. Sure, you can make the argument, but I wouldn’t have bought it had it been $500k as I couldn’t have afforded it at the time. And the reason I’m not selling has less to do with it not being a price I’d be willing to sell at, and more to do with I need a place to live, the housing market prices are crazy right now, and I don’t want the hassle of moving - there is value beyond the $. I’ll take my $500k net worth and stick with the house I have, but that $500k is meaningless in some ways because I’m both not selling, nor is it actually the price I paid. It’s like getting excited that my Disney Stock is $177 when I bought it for $30, but that $147 difference is largely meaningless unless I sell. And if I don’t sell, it’s no different than saying my stock is $30 - the sunk cost - because until I sell, the value is unrealized to me. But just because I’m not yet willing to sell my stock doesn’t mean I’d want to invest $177/share of my money now so much as I’m willing to wait for it to continue to grow. And unlike my DVC, my stock’s end value is the only thing going for it.

So, sure, if I don’t sell my DVC, I’m not realizing the profit of that sale. But DVC isn’t just an item; it also has value, and that other value is the reason I don’t sell. Because by the same logic, I’m also NOT paying the cash price of the rooms I’m staying at, and I receive other discounts and benefits from my membership, and that isn’t being taken into consideration in calculation.My VGC was bought at $195, but apparently could sell for $300 now. I would not pay that price. I’m not selling because I would lose the value that membership brings.