How will DVC 2042 contracts play out in next 37 years

[wvalx]

Anybody have thoughts on how (or if) a decline in price for all 2042 resorts will happen? I assume the turning point will occur when Disney no longer applies their ROFR. At some point people will no longer feel induced to pay for a high price for something that will expire and the price of contracts will drop proportionally to the number of years left.

Since Disney touts DVC that it pays for itself in 7-10 years, do you think that Disney will employ ROFR up until 2032 or do you think it will happen sooner than that? At that point will people stop selling their contracts and hold on to them till the expiration since they decline sharply in value?

Just curious, since I am thinking about adding on contracts somewhere down the line 10-15 years from now.

 

[Caskbill]

I don't think ROFR will have anything to do with the selling prices of contracts. The marketplace will determine that. If someone is asking too much they simply won't get any offers at all. Disney won't have any contract to offer ROFR on. Even if Disney quit using ROFR totally, if someone puts up a contract for sale, if it's a very low price it will still sell, probably very quickly, and if it's too high, the contract won't sell.

What ROFR will do is indicate what Disney thinks is a fair market price. When they're using ROFR it means they think the selling price was below market value. Here meaning that market value is what they can buy it for versus what they can sell it for after adding in their additional expenses to resell the contract points.

If they don't exercise ROFR they think the selling price was right at market value or above, meaning that they could not purchase at that price, add their additional costs to sell the points, and still come out ahead.

Bottom line, as we get further and further toward the 'end dates', the resale prices will drop. At some point the selling price 'curve' will stop going up and will start going down. At this point it would only be a guess as to when that will happen: 5-years from now, 10 years, 20 years? It's anybody's guess.

 

[wvalx]

Doesn't ROFR artificially hold up values as it denies anyone from buying except from Disney's established price. If it didn't Disney would have no need to employ ROFR. Or are they strictly looking for profit from ROFR?