if SSR has a new ending date, what will happen to resale prices?

[InstImpres]

Originally posted by lenshanem
After reading this thread I'm worried since I just put down deposit for BCV!

What is your current concern??

 

[ftmyersgirl]

lenshanem


I fluctuate between being worried, like you, about making the investment and worried that I cannot make the investment in Boardwalk Villas by buying directly from Disney.

I get upset every time I read that someone is allowed to buy a BCV and then add the Broadwalk Villa, as was done in another thread. I have not been offered that option. As a matter of fact, my guide told me there were no Boardwalk points being sold to anyone and I had to switch guides just to ge the information. Now I have to wait untill June to buy.

Then I get upset when I read these threads regarding the scheduled termination date of the DVC plan and how it may affect the resale of my points.

What I am trying to internalize is that it really is not an investment but a different way to pay for your vacation. Once I convince myself of that maybe there will be some Boardwalk Villa Points left for me to buy.

At any rate, rest assured that you are doing the right thing by coming to this board and reading the different perspectives This way you decision is informed and you will never regret it.

I have discovered It is the best and only way to get information regarding DVC. I have asked Disney several times for a blank contract and closing document to be sent to me for review so I can determine precisely what type of ownership I am buying into but I have yet to receive this. I have not even gotten the video. This is after requesting material several times since March 3, 2003. I think I ask too many questions.
Do I not?

 

[Dean]

There's actually no need for a DVC II. There's no problem with having resorts in the club with different ending dates other than the transition time when the current resorts are ending. Since that will be an area that requires some adjustments anyway, it shouldn't be any worse than what's already in store.

 

[Tinkrbell]

There is a major difference between the 2 resorts, I don't think you can compare BCV with SS. I've stayed at both BC and DI, and its arguable different.

I think SS is going to have some mighty big shoes to fill, in order to keep sales up. So as for extending the end date it might be a good idea.

For those of you who think that "sales are just fine" and wonder why change? My DH is a prime example of that and probably a large number of the marketing public. Those who want in on the "ground level". We looked into DVC in 98 and he said no because "9 yrs were already gone, we no longer got tickets, no big incentives", and I'm still bugging him 5 yrs later. He now says "If they come out with a new program, and a new end date, I'll buy!"

So I don't doubt that they'll eventually have a new end date, but I also don't see how that would effect resales. Also, you have to think of how many thousands of people that have been to WDW, and thought about it? This might give them a whole new sales perspective. JMHO.

 

[vernon]

I don't see any reason for Disney to change the end date at this time. I think it would send conflicting signals to prospective buyers. People with "cooler feet" would use it as an excuse to hold on for the "next resort" in the hope it will have a different end date. Most people still see the "break even" at less than half the current time left to run. Do people really look at the difference between 40 and 50 years? I feel that is just too far down the road for most people. Does ANYONE think, this will be great in 2038 I'll get a cheap deal on accomodation, I think not. We all look at our (relative) immediate needs, and say " well this will be paid off in X years, after that it's free ( other than dues)". I do think it may become a factor with say 20-25 years left to run, but by then, IMHO Disney will be looking at what it will do with the current inventory when that comes on line in 2042.

I think it more likely that there will be a "fallow "period between 2020 and 2032 where not much happens. Then IMHO it may go either of two ways.

1) Disney may start "presales" of the current DVC resorts to previous owners ( or their heirs) offering a discount for those signing up early. Maybe offering park tickets for the time between sale and 2042.

2) ( more likely IMHO) Disney builds one (maybe more) new DVC resort ( to whet the appetite) with an End date of 2082 (or there abouts) stating that this will be the end date for the current DVC resorts when they are resold. There will be a MASSIVE advertising campaign. Having a "new" DVC resort to sell would get all the interest back up and having left the market alone for a little while it would have a build up of potential buying pressure that would mean it was likely the new DVC resort sold quickly. This would encourage the owners of the current DVC resorts to renew pretty quickly.

There would be a LOT of inventory to shift, but I think this would be the most efficient way of encouraging a large take up in the existing owners. Which, IMHO , HAS TO BE Disney's biggest worry. If they "oversell" a DVC II before they have all this inventory in 2042 come on line they are going to struggle to shift it, they need to create an atmosphere where people REALLY WANT TO MAKE SURE THEY DON'T MISS OUT.

IMHO it makes Disney's administration of the DVC much easier to have all parts of it operating to one common end date. Otherwise each resort should, in theory, have it's own management committee looking after it. This is because communal services, such as transportation, maintanance, staffing could, in theory, all have to have different contracts.

 

[Dean]

Vernon, the only sales DVC cares about is what they are selling. They will not announce a new ending date with any real sales still going on elsewhere. The only issue is that if EP happens and is the large resort announced (600 or so units), they will still be selling at less than 30 years remaining if the ending date were the same. This would hurt sales significantly. I can tell you that there are many people that have not bought at DVC over the years becaue of the fact it's not "deeded" and is RTU. They are not the type to be on this BBS so you won't hear about it here much or at all. So I think that group will become larger as the years dwindle. In the world, once RTU timeshare get much less than 30 years, there is an affect which worsens over time. Of course none of the rest of those are at WDW which should buffer the realities somewhat but not totally.

Prediction is that SS will be the last resort and all will end 2042. If (big if) EP happens the date will change likely back to 50 years. Whether it changes with SS or with EP is a question mark. Then the issue is whether DVC will sell "extentions" for the current DVC. My guess is they will but I'm sure they'll need enough takers to make it worth their while, likely 60-70% of the membership. That means it'll need to be fairly cheap to do so, maybe $5 pp (max of $10) fee to extend if paid now.

 

[ralphd]

Originally posted by Dean

Prediction is that SS will be the last resort and all will end 2042. If (big if) EP happens the date will change likely back to 50 years. Whether it changes with SS or with EP is a question mark. Then the issue is whether DVC will sell "extentions" for the current DVC. My guess is they will but I'm sure they'll need enough takers to make it worth their while, likely 60-70% of the membership. That means it'll need to be fairly cheap to do so, maybe $5 pp (max of $10) fee to extend if paid now.

Think Dean is correct on his prediction on EP and the possible member cost per point of contract extentions. The top DVD executives will have a 'Proforma Income Statement' showing the income and the cost of selling extensions to the membership.

Some timeshare proponents do not like RTU contracts. But, some that will talk against RTU contracts have them. Most Caribbean and all Mexican timeshares are RTU.

Note: I use the description 'DVCII' only to differentiate between existing and contracts with an extended termination date.

ralphd

 

[Tinkrbell]

Dean- Your prediction is probably correct, having members pay $5-10/pp on an extention of an ALREADY PAID FOR building plus the price of dues, makes complete sense. To have an already vested group of owners continue to own/pay would be the ideal way to maintain a resort.

Either way, they will have 6+? buildings paid in full to either rent out, or resell. Not a bad deal for Disney.

Whether they change the end date with SS or EP doesn't really make much difference. I just think that SS is going to be a real hard sell after having BCV.

 

[ralphd]

Extension sales:
Besides- is it easier to sell to someone who knows very little about DVC or to the members of this forum.
We have completed 5 add-ons and just sent in a deposit to Shontell to purchase a resale. Think they can see the potential market for future DVC sales?

ralphd

 

[Dean]

Originally posted by Tinkrbell
Whether they change the end date with SS or EP doesn't really make much difference. I just think that SS is going to be a real hard sell after having BCV.

I somewhat disagree and here's why. DVC has proven the ability to sell on property resorts. I think they'll need a gimick much like OKW had. What that gimick is I could only guess. Will it be lower dues or points, likely not lower points. Maybe larger rooms. They already have announced GV and a themed pool but I don't think these will be enough. The other selling point is the one that VB and to a certain extent, HH has used. That is "buy here and stay at the other resorts". I'm sure they'll have a pretty attractive presale likely better than the BCV one. They still need something else in my opinion if they want to sell fairly quickly along the lines of VWL and BCV. My guess is a spa combination, special usage if staying there but the possibilities are many. If EP happens I think it will be far better received than SS but that's just my opinion as I know some are looking forward to the location.

 

[lenshanem]

Following up to a response to my post earlier on this thread, my concern is that I just laid down my deposit for a contract yesterday with the year ending 2042. Next year are they going to come out with a new contract with many more years than what I closed on? I will be quite bummed as we wouldn't have had DVC for very long.
Also, will the resale value on mine pullet because I have the old ending date?

 

[Dean]

Originally posted by lenshanem
Following up to a response to my post earlier on this thread, my concern is that I just laid down my deposit for a contract yesterday with the year ending 2042. Next year are they going to come out with a new contract with many more years than what I closed on? I will be quite bummed as we wouldn't have had DVC for very long.
Also, will the resale value on mine pullet because I have the old ending date?

I think it's not very likely SS will have a different ending date. If EP happens it likely will but we're talking several years away. If you're that concerned, buy less points now and then add on later once things define themselves. Don't sit back and not buy based on this issue. Many have not bought when they first looked and then kicked themselves later. Remember that 2042 is still 39 years away.

 

[vernon]

Dean said

My guess is they will but I'm sure they'll need enough takers to make it worth their while, likely 60-70% of the membership. That means it'll need to be fairly cheap to do so, maybe $5 pp (max of $10) fee to extend if paid now.

Dean what length of time do you think they would be offering at $5-10 per point? Even without inflation someone could buy rooms at OKW for the equivelent of $40-50 per night (plus dues). The "dues cost" would have to be something like 75-80% of the whole venture ( somewhere in the region of $20-30 per point for dues per year) and that would totally remove the concept of DVC being a "prepaid" vacation.

Tinkerbell, I don't think it matters that the building etc are paid for, they still have a "real market value" . I think disney's shareholders would go balistic if Disney sold off 6 valuable assets at 5-10% of the value of those assets. It's like saying " my house that I bought in 1980 for $30,000 is now paid for. I will sell it for $30,000 despite the fact that it's market price is $250,000" It ain't going to happen. I agree there will be a discount from what would be "market price" for renewals, but I sincerely doubt that discount would be more than 20% of "market value" . I would expect more like 10% and a few perks like park tickets included.

 

[Dean]

Originally posted by vernon
Dean said
Dean what length of time do you think they would be offering at $5-10 per point? Even without inflation someone could buy rooms at OKW for the equivelent of $40-50 per night (plus dues). The "dues cost" would have to be something like 75-80% of the whole venture ( somewhere in the region of $20-30 per point for dues per year) and that would totally remove the concept of DVC being a "prepaid" vacation.

Vernon, none of us know what the costs will be then either for WDW or dues. For members to shell out cash now for an extra 10-12 years in the future, the charges will need to be fairly minimal. Rememer they will need to get a large portions of owners to bite to make this worth their while. $10 pp for the extention is somewhere around an equivielent of $50 pp for an entire contract. I feel the discount would be a necessary one to make a venture such as this successful.

Now if they waite until a few years from the end, I suspect things would be different. Frankly, I doubt it'd be worth their while to assemble a new sales team and all that goes with it just for extensions.

 

[vernon]

OK , obviously I missunderstood. I thought you meant the renewal cost would be much nearer to the end date of the current contract.
JMHO but I couldn't see a take up rate anywhere near enough for DVC to make it worth selling extensions now. Is there ANYONE that would pay out not for an extension from 2042 to 2052 in the next year or two? There's just too much that can change from now to 2042 for people to think it a worthwhile investment. JMHO.

 

[vernon]

Dean said

$10 pp for the extention is somewhere around an equivielent of $50 pp for an entire contract. I feel the discount would be a necessary one to make a venture such as this successful.

I disagree with your maths there Dean, if we work on 200 points at $10 per point that's a $2,000 down payment now for use from 2042 - 2052. If you invested that money at an annual rate (compounded) at just 4% ( a 10 year interest rate swap on the interbank market in US$ has an annual (compounded) rate of 4.36 % so I don't think that's an unfair rate to use) that is the same as a fee of $6,000 in 2042. making the cost $30 per point for that 10 years ( or equivelent of $150 per point for a "full term contract")

I don't think the maths add up for anyone with an excel spread sheet. Doesn't mean Disney wouldn't try to sell it in the way you describe, does mean it would get a minimal take up if many people explained it the way I have.

I know there are a lot of people who think, would like, a DVC II to come about. But it makes no sense to bring DVC II along and then "rationise" the previous system into the new ones further finishing date. It makes more sense, IMHO to continue the present system and end date for as long as DVC sells. IMHO the current economic climate ( low interest rates and lower returns on capital) make DVC look a good investment for "quality of life" when faced with such low returns on your capital. Afterall what are most people saving for, so their future life can be comfortable and they can pamper themselves. A DVC purchase fits the bill very well both in terms of cost and also of "quality of life" experience.

 

[Dean]

Originally posted by vernon
Dean said
I disagree with your maths there Dean, if we work on 200 points at $10 per point that's a $2,000 down payment now for use from 2042 - 2052. If you invested that money at an annual rate (compounded) at just 4% ( a 10 year interest rate swap on the interbank market in US$ has an annual (compounded) rate of 4.36 % so I don't think that's an unfair rate to use) that is the same as a fee of $6,000 in 2042. making the cost $30 per point for that 10 years ( or equivelent of $150 per point for a "full term contract")

I don't think the maths add up for anyone with an excel spread sheet. Doesn't mean Disney wouldn't try to sell it in the way you describe, does mean it would get a minimal take up if many people explained it the way I have.

You think the price is too high? I'm surprised. Using the direction in your post, the "value" of the points should increase at least as fast as the money would earn interest. I do agree that your paying good money for an unknow far into the future. Likely one that the buyer won't be able to use, only pass on the others. I would doubt DVD would do i for any cheaper or that members as a group would pay more. What would it take to get me to pay for another 10 or so years, likely down around the $5-6 pp range I'd guess. It would depend on the specifics though.

Using the thinking though, I'm not sure DVC would be worth buying for anyone at the current prices. One way to look at it is a new buyer is essentially paying about $20-25 pp for those last 10 years. $74-84 pp divided by 39 years.