Inventory This High?

[HIRyeDVC]

That and there’s a ticking time bomb of 2042s that are going to continue to devalue rapidly in the coming years. If DVC wanted to breathe new life into the program they would start buying back 2042s and selling them with 2057 expirations. That additional 15 years of use would bolster the OKW/BCV/BWV market significantly.

I don't think Disney cares about what happens to old resorts. Their primary goal is to make new money with new resorts. Given the debacle with the OKW extensions, I don't think Disney wants to entertain that again anytime soon. It would be much more financially lucrative and legally easier, for Disney to refurbish the most popular 2042 resorts (BWV and BCV) and flip them as new 50-year resorts in the most prime real estate outside of Seven-Seas-Lagoon. Disney doesn't care at all about resale values, as long as they can keep selling new inventory. Of course, it may be shortsighted, considering one of the greatest appeal to DVC is it's resale value. Only time will tell.

 

[Wakey]

I don't think Disney cares about what happens to old resorts. Their primary goal is to make new money with new resorts. Given the debacle with the OKW extensions, I don't think Disney wants to entertain that again anytime soon. It would be much more financially lucrative and legally easier, for Disney to refurbish the most popular 2042 resorts (BWV and BCV) and flip them as new 50-year resorts in the most prime real estate outside of Seven-Seas-Lagoon. Disney doesn't care at all about resale values, as long as they can keep selling new inventory. Of course, it may be shortsighted, considering one of the greatest appeal to DVC is it's resale value. Only time will tell.

They do or did care about resale value. Too low, and the gap with direct becomes just too large. That’s happened now. Who would buy SSR direct (and they must have a ton of points) when it’s less than half price resale now? That’s the whole point really why they have ROFR built into the deeds.
Of course, many buy on a whim whilst on vacation with little research so DVD will always sell to them no matter how low the resale price goes.
I think they’ve stopped ROFRing because they have already acquired a lot of points and the market isn’t there to buy those points direct, but there’s so many contracts hitting the market now, and they probably don’t have the budget, that they simply couldn’t buy enough back to influence the price enough. So they’ve given up.
Think of ROFR as the boy with finger in the dam wall. The dam has now burst and the resource isn’t enough to stop that water.
This then leads into an ever decreasing spiral until demand increases.
Best thing I think DVD can do now is give some fantastic headline grabbing perks to stop members offloading. A great annual pass deal, and maybe some free Genie would really stimulate demand.
If things don’t turn around quickly I could see Poly new build going on ice next year.

 

[cvjw]

DVC owners have had enough of the huge costs just to enter the parks (including Genie, surge pricing, and a few ILL etc, since 2015 prices for park entry are up about 270% or roughly ten times inflation). DVC owners are finding new places to vacation and off loading. This next trip could be our last, I can no longer justify park ticket prices which cost around the same as a weeks package holiday now to take my family to Spain (including all inclusive hotel and flights- I’m in the U.K.).
In fact I‘m just looking at taking 3 of us to Qatar in a 5 star all inclusive hotel with food and all beverages for a week which is very high end , including flights with Qatar Airways for almost exactly the same as it will cost for our next park tickets for 4 alone for a week, with Genie added and 2 ILL. That is how mad the situation has become.
My kids now want to see the rest of the World (we always come 1-2 times a year), and it’s Japan next summer, maybe South Africa, and Thailand, as well as Australia in upcoming years. This jump in thinking was triggered by the sheer unrelenting greed of Disney.
I wasn’t surprised to see Mine Train remains an ILL despite Tron opening, and I’m not surprised to see Genie+ double in price on certain days from launch price.
The company kind of sickens me now, so all I can do is vote with my feet.

We visited Disney last weekend with a party of 6 for 4 nights. We used our DVC points for a 2 bedroom at BLT and used a combo of old non expire tickets and purchased 6 one day tickets. Our tickets were $150 each for a day at Epcot. Genie + was $29 per day X 6. ILL was another $29 per day X 6. We ate dinner at BOG and the bill for 6 people was $470. And it wasn’t even a good meal.

We added up how much the BLT villa would be rack rate plus the cost of our tickets (adding in the current value of our non expire hoppers) plus genie and ILL and food. Around $15,000 for 4 days for 6 people. Who wants to spend that much for a Disney weekend? Crazy. That will be our last trip for a while.

 

[HIRyeDVC]

They do or did care about resale value. Too low, and the gap with direct becomes just too large. That’s happened now. Who would buy SSR direct (and they must have a ton of points) when it’s less than half price resale now? That’s the whole point really why they have ROFR built into the deeds.
Of course, many buy on a whim whilst on vacation with little research so DVD will always sell to them no matter how low the resale price goes.
I think they’ve stopped ROFRing because they have already acquired a lot of points and the market isn’t there to buy those points direct, but there’s so many contracts hitting the market now, and they probably don’t have the budget, that they simply couldn’t buy enough back to influence the price enough. So they’ve given up.
Think of ROFR as the boy with finger in the dam wall. The dam has now burst and the resource isn’t enough to stop that water.
This then leads into an ever decreasing spiral until demand increases.
Best thing I think DVD can do now is give some fantastic headline grabbing perks to stop members offloading. A great annual pass deal, and maybe some free Genie would really stimulate demand.
If things don’t turn around quickly I could see Poly new build going on ice next year.

I agree with everything you've said. I still don't think Disney cares what happens to these contracts once they're sold direct. They've always exercised ROFR when it was a great deal for them and when they have the demand/budget to do so. But as you said, the demand for "sold out" resorts just aren't there when you have resale contracts selling for less than half. The minute they imposed resale restrictions was when Disney decided not to care about resale. In fact, it was a direct assault against the resale market. Outside of Aulani, I believe DVD will eventually sell out Riviera, VGF, and VDH. And with the money earned, they'll turn it around and build/sell Poly2, and whatever else they have in the pipe. Lots of people want to believe the DVC apocalypse. I'm just not one of them. And I could care less what happens to all the 2042 resorts or future impacts of resale restrictions because I did not buy into DVC as a financial investment. My contracts are paid in full, and I can take solace that I'll be able to take Disney vacations until 2068, God willing.

 

[RichVIII]

Total inventory has dropped about -250 from February 1. There could have been that initial rush of supply late 22/early 23 where sellers wanted to exit their contracts with dues season reminding them of their obligation. The ebb and flow will have supply oscillating between record-high-inventory and almost-record-high-inventory.

ROFR is semi-retired as Disney has known demand cratered many months ago. On the demand-side, there’s just no imperative to own a timeshare given the general economic strain. Contract-buying has floundered and is reserved somewhat exclusively for poachers looking to snag 20% discounts in an already discounted market. There’s just not a whole lot of activity.

But as I say anytime I hear someone parrot “low inventory” for housing—Drive around any neighborhood, there’s plenty of inventory; there’re just not signs in the front yards yet. There are 16 million vacant homes; over 17% of homes in Florida sit empty. Not for sale, no one living in them. With the surge in DVC rentals, there seems to be many unused or vacant contracts trying to find a home. Eventually they’ll end up on market.

I think the headwinds for DVC are there’s just so much supply, so much existing ownership base, that not only do you need to maintain churn with new buyers, but to drive prices higher you must have an imbalanced demand-driven market. While we are just a year or so removed from the DVC frenzy, the market has one heck of a hangover with many recently new owners underwater.

Agree, inventory has dropped slightly. I think some of this (while completely anecdotal) I have seen play out on many boards/FB etc. The ”its a buyers market” narrative and people seeing what seems like a relatively good deal if you have been in the market in the past two years.

Those that have sold have had a more reasonable price tag. I have to laugh at some of the listings at this point. For a broker, at least it makes those who come on more reasonable look like a deal.

The news of banks and growing layoffs are certainly concerning and has to make some wonder - what happens if I lose my job? Are those points really needed? And do I have thousands and thousands of dollars to buy tickets. DVC had headwinds for sure. I worry it will create a draconian approach from management to put even more differentiators for direct versus resale.

 

[HIRyeDVC]

I worry it will create a draconian approach from management to put even more differentiators for direct versus resale.

Isn't that Disney's goal? I mean, how else would Disney be able to sell direct at the current ridiculously high prices? It'll be interesting how they price the upcoming tower at Disneyland. I won't be shocked at at all if they price it at $227pp and crazy high points chart with the sales pitch that new owners can enjoy free diet cokes at the new DVC lounge in Tomorrowland. I personally would never be sold on that but I could imagine others who are already goo goo gaga-ing over the new Moana-themed grand villas that's going to cost 300 points a night!

 

[AnnaKristoff2013]

DVC has grown too fast. While DVC members make up a very small percentage of the Disney fanbase, it's also not for everyone, especially at current direct prices which is crazy high. Add to that, you have many members who are disgruntled, or moving on from Disney for a myriad of reasons not necessarily negative.

I think this hits the nail on the head. Minimum direct buy-in with closing costs right now is pushing $35,000. With the current ever-inflating points charts, that maybe gets you a week in a studio. That's a lot of money for what is really an impulse buy. (People who go home and do their research usually end up buying resale or not at all). Disney got greedy and it's coming back to bite them. If they had kept the direct buyin in the still pricey, and definitely still profitable, $150 - $175ish range, with a 100 point buy-in, they wouldn't be having these problems, and they would still be quickly selling out their resorts and turning fast profits.

Oh, and not caring enough about DVC members to even let them buy an annual pass isn't helping.

 

[CLE2WDW]

I think this hits the nail on the head. Minimum direct buy-in with closing costs right now is pushing $35,000. That's a lot of money for what is really an impulse buy. (People who go home and do their research usually end up buying resale or not at all). Disney got greedy and it's coming back to bite them.

Agreed. And with financing options basically being an obsolete given the interest rate market the DVC market is in desperate need of capital.

I’ll predict this: DVC is going to have a really difficult time selling anything outside of RIV direct. And furthermore I hope they learn from their mistakes they have made over the last decade or so.

 

[AnnaKristoff2013]

That and there’s a ticking time bomb of 2042s that are going to continue to devalue rapidly in the coming years. If DVC wanted to breathe new life into the program they would start buying back 2042s and selling them with 2057 expirations. That additional 15 years of use would bolster the OKW/BCV/BWV market significantly.

They can't do this. If they extend the ground lease, they're going to have to do it for everyone. This is the mistake they made with OKW.

 

[Cfabar1]

I’m curious what the draconian measures people think DVC would be able to take? I’m not sure there’s many other sticks to offer, only carrots as far as I can tell.

 

[CamillaF]

They can't do this. If they extend the ground lease, they're going to have to do it for everyone. This is the mistake they made with OKW.

It's better for Disney to let the resorts with less than 20 years left on the lease go down in price. It makes the longer leases more valuable. Then the can concentrate on buying back only the resorts that have longer leases and keep those prices higher.

 

[CLE2WDW]

It's better for Disney to let the resorts with less than 20 years left on the lease go down in price. It makes the longer leases more valuable. Then the can concentrate on buying back only the resorts that have longer leases and keep those prices higher.

It’s a double edged sword. If DVC allows those contracts to deplete to zero they set the precedent for the 2057s. How does DVC recoup that enormous sudden drop in DVC dues? What’s going to happen in between 2039-2042 when DVC’ers are frantically trying to use their last round of points? What happens to the properties themselves? I doubt DVC would simply bulldoze BCV, BWV, OKW, etc.

 

[CamillaF]

It’s a double edged sword. If DVC allows those contracts to deplete to zero they set the precedent for the 2057s. How does DVC recoup that enormous sudden drop in DVC dues? What’s going to happen in between 2039-2042 when DVC’ers are frantically trying to use their last round of points? What happens to the properties themselves? I doubt DVC would simply bulldoze BCV, BWV, OKW, etc.

DVC will own the proprieties in in 2042. They will have to do a refresh and then can sale them or rent them. If people walk sooner because they are not getting benefit from the membership then Disney gets control even sooner and can rent or start the rehab sooner. The point issue between 2039-2042 is not really Disney's issue it's the DVC owners. If they want to sprinkle magic they could make more usage for points that are attractive. Other resorts, cruises etc. The contracts are going to eventually be zero. Disney has to decide what date they are going to stop propping it up.

 

[kanerf]

What I see are a lot of expectations on the part of sellers that someone will pay their rather high prices. I see contracts that come in at a reasonable price. location and use year and are quickly gobbled up. I did that myself on a small BLT I saw last month. Already through ROFR and just waiting on the contracts to sign.

 

[Matty B13]

It’s a double edged sword. If DVC allows those contracts to deplete to zero they set the precedent for the 2057s. How does DVC recoup that enormous sudden drop in DVC dues? What’s going to happen in between 2039-2042 when DVC’ers are frantically trying to use their last round of points? What happens to the properties themselves? I doubt DVC would simply bulldoze BCV, BWV, OKW, etc.

DVC will either bulldoze the buildings and build even bigger resorts, or do a quick refurbishment and start selling new resorts the next year. Any money they lose on DVC Dues for the 1-5 years that the resorts are not being sold, will be made up for by the higher point charts. I expect DVC will double the total points at each resort when they refurbish them in 2042. With the location of BCV & BWV either matching VGF points or even going over them.

 

[Lumpy1106]

DVC owners have had enough of the huge costs just to enter the parks (including Genie, surge pricing, and a few ILL etc, since 2015 prices for park entry are up about 270% or roughly ten times inflation). DVC owners are finding new places to vacation and off loading. This next trip could be our last, I can no longer justify park ticket prices which cost around the same as a weeks package holiday now to take my family to Spain (including all inclusive hotel and flights- I’m in the U.K.).
In fact I‘m just looking at taking 3 of us to Qatar in a 5 star all inclusive hotel with food and all beverages for a week which is very high end , including flights with Qatar Airways for almost exactly the same as it will cost for our next park tickets for 4 alone for a week, with Genie added and 2 ILL. That is how mad the situation has become.
My kids now want to see the rest of the World (we always come 1-2 times a year), and it’s Japan next summer, maybe South Africa, and Thailand, as well as Australia in upcoming years. This jump in thinking was triggered by the sheer unrelenting greed of Disney.
I wasn’t surprised to see Mine Train remains an ILL despite Tron opening, and I’m not surprised to see Genie+ double in price on certain days from launch price.
The company kind of sickens me now, so all I can do is vote with my feet.

^ THIS
We were just in San Diego touring the Midway (HIGHLY recommend BTW) and watched as the Wonder set sail. DW would LOVE to go on another cruise, but as we watched it sail away, she also said she has no desire to go to WDW anymore. That sucks to put it bluntly, but I see her viewpoint. When we bought DVC (just before restrictions) we were going at least once a year and could have gone more. We felt like we were being treated better for staying on property and were happy to buy in to DVC. Pun intended, that ship has sailed. On-property perks are all but gone, DME is gone, park ticket prices have gone through the roof and there are no special deals. Oh, then there's G+ and ILL - those extra costs really felt like a slap-in-the-face.
It's easy to blame Chapek and he IS to blame, but this is Iger's problem now, and he's been in charge long enough for the lack of changes back to the way it was, and even the recent decisions (like ILL for both 7DMT and TRON) to say, well, those are his. It's not enough for him to admit Disney is fleecing the very people who are holding up the pedestal on which they stand - there needs to be action, IMMEDIATE action.
We'll probably hang onto our contract long enough for the points to re-load and hopefully the price to rebound, but in all honesty, we are probably in camp @Wakey and we are out too.

 

[HIRyeDVC]

I understand all the frustrations by long time owners and Disney fans. But the parks are more crowded than ever and revenues are highest than ever. If people are frustrated, they're certainly not expressing it with their feet and wallet. How do we reconcile this?

 

[sndral]

Agreed. And with financing options basically being an obsolete given the interest rate market the DVC market is in desperate need of capital.

I’ll predict this: DVC is going to have a really difficult time selling anything outside of RIV direct. And furthermore I hope they learn from their mistakes they have made over the last decade or so.

Riv & VGF have been racing to the bottom in terms of direct sales, the biggest differential seems to be whichever of the two resorts costs less sells more direct points than the other, thus I don’t see anything in the direct sales data that suggests that Riv is less difficult to sell than it’s only direct competitor VGF2, indeed, last month VGF sold 41,000+ v. Riv.’s 31,000-. https://dvcnews.com/dvc-program-men.../5537-dvc-direct-sales-slump-in-february-2023 .
My prediction is that unless things pick up, at the current sales pace VGF will sell out in 1.75 years, Poly will go on sale & sell out in 3-4 years & Riv will still be in direct sales since it’s going to take 8.23 years to get the second half of Riv sold.
Realistically I doubt it will take as long as current numbers suggest because unless the pace picks up I think DVC will get creative & aggressive in trying to move inventory. It wasn’t that long ago that they offered free cruises for direct buys https://www.dvcnews.com/index.php/dvc-program/financial/794-free-cruise-with-dvc-purchase-or-add-on & there’s alway developer’s points https://dvcnews.com/index.php/dvc-program/financial/168-double-developers-points-incentive.
More significantly in regards to the resale market, until direct sales pick up I don’t see DVC reviving ROFR & w/out the ROFR prop resale prices will continue to drift downward until there is less inventory. Right now the resale market has several month’s supply, but it seems demand is starting to increase in reaction to the lower prices, so perhaps we’ll reach the resale bottom sooner rather than later?

 

[RoseGold]

My prediction is that unless things pick up, at the current sales pace VGF will sell out in 1.75 years, Poly will go on sale & sell out in 3-4 years & Riv will still be in direct sales since it’s going to take 8.23 years to get the second half of Riv sold.

I agree with your math, but wow is it stark to see it like that. Poor Aulani doesn't even get a sell-out date anymore, LOL. Ignoring DL, this will be four resorts in direct sales at one time, which is bananas.

 

[HIRyeDVC]

I agree with your math, but wow is it stark to see it like that. Poor Aulani doesn't even get a sell-out date anymore, LOL. Ignoring DL, this will be four resorts in direct sales at one time, which is bananas.

Of course Aulani has a sell-out date. It's 2062! But in all seriousness. Wasn't VGC, BLT, SSR, AKL, and Aulani all selling at the same time too?