Housing slump affecting DVC sales?

[AllieV]

2011 EDIT: I started this thread a few years ago and I'm interested to see if anyone's opinion has changed much now that we have better hindsight. BTW, some great insight in these comments four years ago. Some of you were dead on. At the time I was new and didn't have my notifications on and didn't know how to find the thread again, so I apologize for not chiming back in.
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ORIGINAL MESSAGE:
Reading so much about the housing mortgage/market in the dumper, I'm wondering if this will trickle down to the DVC "housing" market. It seems that SSR is selling slower than expected, a second one (AK) is now selling, and in 18 months they'll be building villas at the contemporary.

I've also seen lots of big contracts for sale. Not smaller ones, like people trying to free up money to buy AK, but rather people selling out completely, dumping, like they need the money elsewhere.

So I'm just wondering if demand for DVC is down with the rest of the housing market and maybe we'll see lower prices soon, better incentives, maybe even a lowering of the entry points by disney.

 

[Deb & Bill]

Might also be people who have done the DVC thing for several years and are looking for other things to do with their money. I know we are considering selling one of our contracts to use the proceeds for another timeshare.

 

[tjkraz]

It seems that SSR is selling slower than expected...

Based upon what evidence?

SSR has been for sale for just about 4 years now and initial projections were that it could take up to 10 years. I'm sure those projections have been revised many times since, but what is the basis for concluding that sales are "slower than expected?"

I'd be willing to bet that there is SOME impact on DVC sales. I have had at least one person tell me that they would love to buy into DVC but have another vacation home to get rid of first. But I would question whether the group of people who fall into that category is more than a blip on the radar.

Disney is NOT going to lower prices. The housing market hasn't been great for several years now, IMO, yet they just had an increase back in February. I wouldn't expect ROFR prices to go down either, except on the older resorts in response to declining contract lengths.

What Disney will do is alter promotional deals over time. Back in the spring of this year DVC was offering AKV and SSR contracts with a matching set of Developer's Points. Today you can get DOUBLE the Developer's Points, so the deal has improved in the last 2-3 months.

In the past DVC has varied its promotional offerings throughout the year. There could be any number of reasons for the varying deals including responses to historical sales trends. In the last few years DVC's best prices have typically been found in the Fall months. Perhaps this is due to lower WDW crowds during the Fall months (less foot traffic at the sale center) and people preparing to spend money for Christmas.

We may well be approaching the start of another great Fall sale event, but I personally wouldn't draw any conclusions regarding future sales prices based upon the current housing market.

 

[Starr W.]

We have 650 pts, but are looking to add a "regular" timeshare into the mix probably a Marriott or Hyatt.

If CRV actually happens, we'll buy there, and perhaps lose the SSR contract and buy a VWL to go along with CRV and VB. Though we might sell SSR if we get one of the Hyatt ski weeks, as you basically get another week with those. You can only take so many vacations a year.

 

[CarolA]

Reading so much about the housing mortgage/market in the dumper, I'm wondering if this will trickle down to the DVC "housing" market. It seems that SSR is selling slower than expected, a second one (AK) is now selling, and in 18 months they'll be building villas at the contemporary.

I've also seen lots of big contracts for sale. Not smaller ones, like people trying to free up money to buy AK, but rather people selling out completely, dumping, like they need the money elsewhere.

So I'm just wondering if demand for DVC is down with the rest of the housing market and maybe we'll see lower prices soon, better incentives, maybe even a lowering of the entry points by disney.

1. Some of the bigger contracts may be commercial renters who have been run off..

2. "and in 18 months they'll be building villas at the contempory" Granted I haven't been around in a day or so, but... there is NO Gurantee and IF sales slow down then the CR could VERY easily be "suites" for the CR hotel and NOT DVC!

 

[keys2kingdom]

... and in 18 months they'll be building villas at the contemporary.

Do you have a crystal ball or is that wishful thinking? I haven't heard anything that indicates this time frame. It's going to take them quite a while to sell out AKV.

 

[SuzanneSLO]

The "hit" to the housing market that I thought would have a big impact was the increase in interest rates on home equity lines. That really started a couple of years ago and doen't seem to have impacted sales.

-- Suzanne

 

[tomandrobin]

Reading so much about the housing mortgage/market in the dumper, I'm wondering if this will trickle down to the DVC "housing" market. It seems that SSR is selling slower than expected, a second one (AK) is now selling, and in 18 months they'll be building villas at the contemporary.

SSR is selling well ahead of schedule, so much so that AKV was pushed into the market faster then expected. CRV is a rumor still. If anything California might be a reality sooner then CRV. But that too is just a rumor.

I've also seen lots of big contracts for sale. Not smaller ones, like people trying to free up money to buy AK, but rather people selling out completely, dumping, like they need the money elsewhere.

There are and has been large contracts for sale. There was a similar thread a couple months back that question the number of resales avaiable. The number of resales have remained constant, relative to total membership.

The suggestion that members are selling cause they need the money for elsewhere is such a leap.

So I'm just wondering if demand for DVC is down with the rest of the housing market and maybe we'll see lower prices soon, better incentives, maybe even a lowering of the entry points by disney.

Lower prices...LOL! No...DVC is one of the fastest growing, more profitable divisions for Disney right now. There are always "incentives" offedered by Disney. The past couple of years the FF promotion at the end of the year typically is the best deal, but may not be back this year.

Disney has recently opened the sales center in Chicago and has filed permits to build a model in California. These are not signs of a company slowing down or not growing.

The entry level of points actually has risen back up from 150 to 160 points. Which is the minimum number of points required for an II trade.

 

[AKV707]

Lower prices...LOL! No...DVC is one of the fastest growing, more profitable divisions for Disney right now. There are always "incentives" offedered by Disney. The past couple of years the FF promotion at the end of the year typically is the best deal, but may not be back this year.

.

I am new to DVC and new to the Dis. What is the ff incentive?

 

[starbox]

We're in Atlanta, and the NY Times recently ran an article about the high foreclosures in Atlanta and the fact that what's happening here is a predictor for what's going to hit the rest of the country - and just this week Homebanc declared bancrupcy.

The real issue with the housing market, based on what I've read, appears to be all the less-than-ethical and predatory mortgages that boomed a few years ago when interest rates were low. People were buying houses with 0% down, paying interest-only mortgage loans, or getting ARMs - and the easy money on the mortgage side lead to homes selling for more than they were worth and people financing more than they could have afforded on a "real" fixed-rate traditional mortgage.

I can see it affecting DVC and other timeshare sales in the sense that many young families and couples over-stretched what a reasonable mortgage payment would have been on a safe, traditional mortgage and over-bought because they got a interest-only, no downpayment, adjustable ARM loan. Now, housing prices are slumping, interest rates are rising, and they have little or no equity. Predatory lending is really sad. IMHO, those mortgages should never have been allowed.

(This is just one more reason that Disney earns my respect - they will only finance DVC responsibly - requiring 10% down and not allowing loans of longer than 10 years.)

 

[tomandrobin]

I am new to DVC and new to the Dis. What is the ff incentive?

Friends and Family promotion. It was $15 off per point discount.

 

[BWV Dreamin]

We're in Atlanta, and the NY Times recently ran an article about the high foreclosures in Atlanta and the fact that what's happening here is a predictor for what's going to hit the rest of the country - and just this week Homebanc declared bancrupcy.

The real issue with the housing market, based on what I've read, appears to be all the less-than-ethical and predatory mortgages that boomed a few years ago when interest rates were low. People were buying houses with 0% down, paying interest-only mortgage loans, or getting ARMs - and the easy money on the mortgage side lead to homes selling for more than they were worth and people financing more than they could have afforded on a "real" fixed-rate traditional mortgage.

I can see it affecting DVC and other timeshare sales in the sense that many young families and couples over-stretched what a reasonable mortgage payment would have been on a safe, traditional mortgage and over-bought because they got a interest-only, no downpayment, adjustable ARM loan. Now, housing prices are slumping, interest rates are rising, and they have little or no equity. Predatory lending is really sad. IMHO, those mortgages should never have been allowed.

(This is just one more reason that Disney earns my respect - they will only finance DVC responsibly - requiring 10% down and not allowing loans of longer than 10 years.)

It will affect sales in that people will be less inclined to finance their contracts with home equity loans. DVC's financing interest rates are very high, even with good credit, and if people become forced to finance thru Disney, this will also drive sales down. I can see the smaller contracts becoming even more popular as this will be the cheapest way to get into the DVC system, and add on more points later as the financial and housing markets settle down.

 

[disney junky]

Having read all the replies and the discussion of the housing market, and believing that what starbox posted truly sums up what has created the current "crisis" I now wonder how many contracts actually go into default each year. I would assume some do. Does anyone have an idea what happens?

 

[JimMIA]

The real issue with the housing market, based on what I've read, appears to be all the less-than-ethical and predatory mortgages that boomed a few years ago when interest rates were low.

I agree, and I think the "housing" crisis is really just a bad loan crisis, and will have little effect on DVC. A downturn in the economy would reduce disposable income and would probably have an effect, but the fact that bad bankers are losing money on bad loans won't have any effect...IMHO.

 

[AKV707]

I agree, and I think the "housing" crisis is really just a bad loan crisis, and will have little effect on DVC. A downturn in the economy would reduce disposable income and would probably have an effect, but the fact that bad bankers are losing money on bad loans won't have any effect...IMHO.

I agree. The housing crisis has been caused by predatory lenders who have capitalized on the American dream to own a home and hurt people in the process.For people who have not been victimized who are not looking to sell their home, there should be no impact on vacation plans, and therefore no impact on DVC.

 

[kimberh]

The real issue with the housing market, based on what I've read, appears to be all the less-than-ethical and predatory mortgages that boomed a few years ago when interest rates were low. People were buying houses with 0% down, paying interest-only mortgage loans, or getting ARMs - and the easy money on the mortgage side lead to homes selling for more than they were worth and people financing more than they could have afforded on a "real" fixed-rate traditional mortgage.

I can see it affecting DVC and other timeshare sales in the sense that many young families and couples over-stretched what a reasonable mortgage payment would have been on a safe, traditional mortgage and over-bought because they got a interest-only, no downpayment, adjustable ARM loan. Now, housing prices are slumping, interest rates are rising, and they have little or no equity. Predatory lending is really sad. IMHO, those mortgages should never have been allowed.

I agree, those mortgages were a disaster looking for a place to happen. What were the finance companies thinking? I asked two friends of mine, that deal in finance today about this type of loans. I just can't believe they were allowed, for one thing. We always had to put a sizeable downpayment on a home. One of my Realtor friends said," she has had multiple closings fall apart, at the Closing." The lenders are really tighting up! Families have already moved, then the closing falls apart. I told her today, "that I thought you didn't move until the closing papers were signed," she said, "she had never heard that."
To the DVC effect; If I couldn't afford my house, I sure would not buy DVC. I hope people buy wisely.

 

[snowbunny]

I don't know whether it's the housing crash or the opening of Animal Kingdom Villas, but the mania for Beach Club and Boardwalk points seems to have subsided in a big way.

Just took a look at TTS resales...no more $100++ per point listings for the Beach Club as there were last year, and plenty of large and small contracts available at both BCV and BWV.

Anecdotally, it looks like reality is setting in.

 

[keishashadow]

Realtor hat on...over the years saw many buyers go with ARMs; varying reasons..

*qualify for a larger loan based on income/get into a bigger house,
*newbies out of school, hoping their salary would increase dramatically,
*people who planned on selling before the increase & make a profit on sales price;
*some people just were the "gambling sort"; thought the rates might drop,
whatever...

All ARM deals i was involved with: every single one of the buyers received the details of the ARM up front, including potential maximum interest caps,etc.

predatory lending is one thing, lumping ARMs in the same pot is another.

 

[ElizabethB]

The latest predictions from people who ought to know are that the sub-prime mortgage crisis will be exactly that -- a crisis, and that it will roil the entire economy as loan money dries up, not just credit for housing, but credit for many of the private equity buy-out deals that have kept the northeast's economy humming along. This is based on an article by Jim Cramer in yesterday's New York Magazine. He believes the only possible fix is a reduction interest rates, which he thinks the Fed will be too slow to implement to make much of a difference.

 

[CarolA]

I have an ARM. It's a five year with a cap each year after that. Personally I am not worried at all, IF I am still here in another three years I will deal with it then but as small as the mortgage is.... it's going to take a lot for me to be in a "panic" situation!

I find it hard to feel sorry for anyone who claims they "didn't understand". Did they really think they could buy that million dollar house for $500 a month? Did they ask any questions or just go with "the bank wouldn't do me wrong"? It's like anything else a little common sense goes a long way. I watch these interviews and I just wonder "what were you thinking"