Historical Value Drops - Resale

[mrsclark]

Out of curiosity, does anyone have an idea of how far prices fall on resale points during a recession - for example, the Great Recession or the 2001 recession? I am trying to figure out if I buy a contract what is the realistic downside is if the market is bad if/when I would go to sell it. Very worst case I know that I should plan for the contract to fall to $0 in value and not be able to recoup any of my purchase price. But realistically, between ROFR and the continued demand for Disney vacations what drops have people seen in the past? 20%? 30%? 50%? More?

 

[Drewski77]

What if I told you that:

A unknown circumstance would happen that overnight shut down all travel, closed every Disney Resort, restaurants, tourism, and tens of millions of people lost their job and...

...DVC prices went up in value! Of course that is 2020-2021, and that certainly doesn’t mean that DVC won’t (and it probably will) drop in price with certain recessions.

However, the resiliency of DVC should be recognized, which certainly gives me confidence in the value of my contracts at least retaining significant value far into their life span.

 

[Sandisw]

i bought BWV at $53 and $55 a point in 2012. It was in the high $70s when I bought BLT in 2009.

At the time, SSR was going in the mid 50s.

 

[ParkHoppers]

IMO prices on DVC will only increase or at worse hold steady. Disney isn’t considered just for little kids anymore. Millennials and Gen Z are all in on Disney. It has become a growing lifestyle. Disney and DVC are red hot and I predict it will stay that way for many years to come.

 

[Delaney14]

IMO prices on DVC will only increase or at worse hold steady. Disney isn’t considered just for little kids anymore. Millennials and Gen Z are all in on Disney. It has become a growing lifestyle. Disney and DVC are red hot and I predict it will stay that way for many years to come.

Sure do hope you're right!!

 

[emilymad]

We bought SSR for $50 in 2011 on a small points contract at that. Ultimately we are prepared for it go down to that again or lower. Over a 50 year contract you just never know.

 

[RoseGold]

There’s a lot more room for the prices to fall than there ever was because of the continual increase in value to a time-limited asset that should be decreasing.

It’s mathematically certain that your contract will depreciate, it’s a question of when, not if.

 

[Marionnette]

Out of curiosity, does anyone have an idea of how far prices fall on resale points during a recession - for example, the Great Recession or the 2001 recession? I am trying to figure out if I buy a contract what is the realistic downside is if the market is bad if/when I would go to sell it. Very worst case I know that I should plan for the contract to fall to $0 in value and not be able to recoup any of my purchase price. But realistically, between ROFR and the continued demand for Disney vacations what drops have people seen in the past? 20%? 30%? 50%? More?

I wouldn't count on any significant drops in the near future.

First, because it is a seller's market right now. The agencies are currently selling more contracts than they are getting new ones to list. That will drive prices up just from a simple supply vs demand perspective.

Second, because DVD does a good job of keeping the resale prices up. Anything priced too low will be taken via ROFR.

At some point, the 2042 resorts (even BCV) will fall in value UNLESS (and this was hinted at during Saturday's Kwafee Talk) DVC offers current owners of those resorts some kind of extention. That would be surprising given what happened with the OKW extensions offered years ago, but by waiting until closer to expiration DVD might get more 2042 owners to bite at the chance. If that happens, you're not going to see those resale prices drop.

 

[TinyTGO]

The years that followed the financial crisis is the only time I recall DVC prices taking a substantial hit.

 

[Evita_W]

i bought BWV at $53 and $55 a point in 2012. It was in the high $70s when I bought BLT in 2009.

At the time, SSR was going in the mid 50s.

We bout Grand Californian for about $80 a point 10 years ago or so, it is now about $250 on the resale market. I wonder what prices will keep doing......still not.making me want to sell yet.

 

[Yinn]

Out of curiosity, does anyone have an idea of how far prices fall on resale points during a recession - for example, the Great Recession or the 2001 recession? I am trying to figure out if I buy a contract what is the realistic downside is if the market is bad if/when I would go to sell it. Very worst case I know that I should plan for the contract to fall to $0 in value and not be able to recoup any of my purchase price. But realistically, between ROFR and the continued demand for Disney vacations what drops have people seen in the past? 20%? 30%? 50%? More?

There's always a possibility of 0. But I saw DVC almost as a stock. There's a possibility it'll go to 0, but it'll go up and down with the market. As you're trying to gauge.

So try this on for size...map it to the SP500 but at 50%. 50% of the losses, 50% of the gains and with a 3 month delay and see how that turns out.

 

[kanerf]

When resale drops a lot below your purchase price it is time to call a broker and add to your portfolio, just like the market. The point is that while there is a momentary reduction in price, the value is still there and over time the price will almost always increase. And just like the market as you approach retirement you can divest of your points and normally make a profit if you have held them for say a minimum of 15 years.

 

[VWLforever]

When resale drops a lot below your purchase price it is time to call a broker and add to your portfolio, just like the market. The point is that while there is a momentary reduction in price, the value is still there and over time the price will almost always increase. And just like the market as you approach retirement you can divest of your points and normally make a profit if you have held them for say a minimum of 15 years.

Couple issues with this.

1. It is now only 20 years away from the expiration of the several 2042 resorts. I'd be happy to wager against anyone who wanted to bet that those resorts would be worth more in 2036 than they are today.

2. Past performance is not indicative of future results. There was a time that very smart people insisted that Enron was a sure thing, and that it had nowhere to go but up. And, DVC isn't even an investment. It's a timeshare with a sunsetting provision- at which time the value goes to zero.

I agree that I could sell my 3 contracts today for more than I paid for each of them. But I am also absolutely certain that won't hold true into the future. All DVC eventually goes to zero. The only question is the slope of the curve between now and then.

 

[RoseGold]

There's always a possibility of 0. But I saw DVC almost as a stock. There's a possibility it'll go to 0, but it'll go up and down with the market. As you're trying to gauge.

There isn't a "possibility," there is a mathematical certainty, because all the contracts have some amount of years left that is less than 50.

These aren't the permanent timeshares that some other companies sell. These expire.

 

[supersnoop]

There isn't a "possibility," there is a mathematical certainty, because all the contracts have some amount of years left that is less than 50.

These aren't the permanent timeshares that some other companies sell. These expire.

While I agree with (what I believe is) your premise, I disagree with your terminology. It's not that the contract decreases in value, but that the utility is consumed. That's not "depreciation." Also, value won't necessarily go negative due to the increase in value, which likely increases at a rate that outpaces inflation. As contracts reach their term, the prices should reflect the remaining value.

 

[Yinn]

There isn't a "possibility," there is a mathematical certainty, because all the contracts have some amount of years left that is less than 50.

These aren't the permanent timeshares that some other companies sell. These expire.

The certainty aspect is tied to the contract itself, not always to the purchaser. If you buy with the intention of exiting after 10 years, it is not a certainty that your contract will go to a value of 0 in that time frame.

So I was talking about it in terms of risk to the purchaser. All time shares have the possibility to go to 0 - prior to contract agreement. Disney is a much more established company but other time shares have certainly gone bankrupt prior to their agreed contract end date.

 

[Drewski77]

The certainty aspect is tied to the contract itself, not always to the purchaser. If you buy with the intention of exiting after 10 years, it is not a certainty that your contract will go to a value of 0 in that time frame.

So I was talking about it in terms of risk to the purchaser. All time shares have the possibility to go to 0 - prior to contract agreement. Disney is a much more established company but other time shares have certainly gone bankrupt prior to their agreed contract end date.

Such a good point, it is about each purchaser and when they sell as to whether any value will be retained.

It would be like saying your car is worth zero the minute you buy it as someday it will be...but of course not until there is absolutely no life left in it.

Same as DVC, which is why we have used car lots and a thriving resale market for DVC.

 

[RoseGold]

There isn’t a “possibility of 0.” There is a certainty of zero.

We can argue about how quickly the 2042 contracts will depreciate, but they will be worth zero after 2042.

 

[Drewski77]

There isn’t a “possibility of 0.” There is a certainty of zero.

We can argue about how quickly the 2042 contracts will depreciate, but they will be worth zero after 2042.

To those holding the contracts and not anyone who sells before 2042.

Getting to zero will be a gradual process, not sure who is arguing they won’t be worth zero at contract expiration???

Before then, the contacts are worth exactly what people are willing to pay.

 

[davidl81]

Let's take 2042 out of the responses (or just assume the OP is buying a resale with 30+ years left on it). I think what they were asking is within the next 10 years or so if we have a major recession how much will prices drop. I would think at at most you would get a 30% drop but much like in 2008 it would be a very short term drop. Much like the overall market DVC experienced a V shaped recovery and only people who sold at the very bottom took a big hit. I would say over a 10 year period the odds of any resort being at least flat in value to today (not factoring in time value of money etc) is 75%+. We can look at the history on these boards and people have predicted doom and gloom on resale prices for years and yet the resale prices just keep on climbing.