Is the resale boom over?

[upritbass]

Is the resale boom over?

No.

 

[Brian Noble]

I don't know how you can call it a "boom" when so much of the resale value is manipulated by Disney through ROFR.

I've followed DVC for a long time---since before the Great Recession---and I believe it's the other way around: ROFR follows the market. During the recession, resale prices dropped significantly, and Disney didn't ROFR anything other than the very odd contract here and there. When demand increases, Disney ROFRs more often because there are more buyers wanting direct purchases of "sold-out" resorts.

Does ROFR influence prices upward? Maybe, but it's not obvious. I've seen some pretty credible analyses that ROFR helps Disney because they don't have to be a competitive bidder in the market. For example, this paper's kicker: "We show that the right-of-first-refusal is inefficient, and it benefits the special buyer at the expense of the seller and other buyers."

 

[Sandisw]

Is the resale boom over?

No.

View attachment 578776

Asking is not the same as selling though. Let's see how long this sits, and then try to figure out what it actually sells for in the end. I know a contract I put an offer in at RIV last week is still there (not the one I eventually bought) is still there over 9 days later.

But, VGC has always held up well because there are so few contracts, and you can't even get it direct.

 

[RoseGold]

Poly's sale prices has been close to the same for like three months now.

Of course, that data drags a couple months with ROFR and closing, so maybe the broker knows more than we do.

Some listings are breaking 190, which is bananas.

 

[BWV Dreamin]

Again, resale prices are too high, especially compared to direct. Until there is a bigger spread between resale prices vs. direct, the value is just not there. I blame the brokers in part for artificially inflating the resale prices, with promises of a buy back at certain price thresholds. Of course what price a resale sells is what the buyer is willing to pay. Maybe the buyer is saying “ your priced too high” compared to direct.

 

[upritbass]

resale prices are too high

Since the definition of 'value' is the price that a WILLING buyer and a WILLING seller agree on, how can resale prices be too high?

 

[Nappy1380]

Again, resale prices are too high, especially compared to direct. Until there is a bigger spread between resale prices vs. direct, the value is just not there. I blame the brokers in part for artificially inflating the resale prices, with promises of a buy back at certain price thresholds. Of course what price a resale sells is what the buyer is willing to pay. Maybe the buyer is saying “ your priced too high” compared to direct.

What is happening in DVC is the same that is happening in traditional real estate. Are you blaming realtors when they have 10 offers at or above asking? The economy is flush with cash and availability is scarce. There will be a small window where resale and direct are unusually close, and then you will see Disney raise the direct price to ensure they are not leaving money on the table.

 

[Nabas]

What is happening in DVC is the same that is happening in traditional real estate. Are you blaming realtors when they have 10 offers at or above asking? The economy is flush with cash and availability is scarce. There will be a small window where resale and direct are unusually close, and then you will see Disney raise the direct price to ensure they are not leaving money on the table.

Exactly.

What is happening in DVC in happening in a lot of markets at the moment.

For example, Hotel prices in Savannah, Georgia are up 20-30% since 2019.

There’s a pent up demand and the Fed put something close to a TRILLION dollars in people’s pockets.

Unemployment briefly peaked at 14.8% but now there is a labor shortage.

All of this is playing havoc with DVC prices.

I can’t be sure what’s going to happen to DVC prices but having lived through a few, this is feeling like another bubble.

All bubbles burst and, during the bubble, there are those who say this bubble won’t.

 

[Chuck S]

A peak kind of makes sense in April. Income Tax refunds, people stuck at home due to COVID....right now there is a real estate boom almost everywhere. People have grown tired of the house they have, after being stuck in it for months. Prices have nearly doubled in the last 5 or 6 years, things are selling for $10K to $20K over asking price.

 

[Nappy1380]

Exactly.

What is happening in DVC in happening in a lot of markets at the moment.

For example, Hotel prices in Savannah, Georgia are up 20-30% since 2019.

There’s a pent up demand and the Fed put something close to a TRILLION dollars in people’s pockets.

Unemployment briefly peaked at 14.8% but now there is a labor shortage.

All of this is playing havoc with DVC prices.

I can’t be sure what’s going to happen to DVC prices but having lived through a few, this is feeling like another bubble.

All bubbles burst and, during the bubble, there are those who say this bubble won’t.

Personally I'm not sure this is a bubble per say. This is vastly different than a subprime prime issue where real estate was inflated by people who couldn't afford the loan vs what is happening now, which is people flush with cash driving up prices. Time will tell but this just feels like a new floor has been established in real estate.

 

[davidl81]

Personally I'm not sure this is a bubble per say. This is vastly different than a subprime prime issue where real estate was inflated by people who couldn't afford the loan vs what is happening now, which is people flush with cash driving up prices. Time will tell but this just feels like a new floor has been established in real estate.

The only thing that will really effect real estate prices will be interest rates. A big part of the reason home prices are rising right now is because a well qualified buyer can get a 600k loan for 2.75% for 30 years. It dramatically lowers monthly payments and allows for homes to sell at a higher price. It will be interesting to watch what the Fed does with rates since I expect them to rise at some point, but likely in a fairly small amount that may not have a huge impact on mortgage rates (maybe they go up to 3.25% etc)

 

[sethschroeder]

Since the definition of 'value' is the price that a WILLING buyer and a WILLING seller agree on, how can resale prices be too high?

Market Value can still be overpriced. It takes months for the mantra to change. Its just now starting to be "it might be better to just buy direct".

I am perfectly fine with resale going to crazy highs since I don't plan on buying points. That being said I think its also a possible warning indicator of issues possibly coming in the US as a whole.

 

[Nabas]

I am perfectly fine with resale going to crazy highs since I don't plan on buying points. That being said I think its also a possible warning indicator of issues possibly coming in the US as a whole.

That’s my primary concern.

Not concerned about DVC prices. More worried about (for example) yet another collapse in the housing market.

 

[Heather07438]

Another thing not known is where inflation will go. If the costs of everything get much higher over the next 5 years then maybe some of the people who now afforded the high contract prices no longer have the excess money to keep taking all the vacations they planned with their DVC purchase. How common that becomes and collective timing has the potential to lower DVC prices. Just don’t know.

 

[upritbass]

Another thing not known is where inflation will go. If the costs of everything get much higher over the next 5 years then maybe some of the people who now afforded the high contract prices no longer have the excess money to keep taking all the vacations they planned with their DVC purchase. How common that becomes and collective timing has the potential to lower DVC prices. Just don’t know.

The question was, "Is the resale boom over?" The answer is, "No." As for further into the future, Magic 8-Ball says, "Ask again later."

 

[KayKayJS]

Another thing not known is where inflation will go. If the costs of everything get much higher over the next 5 years then maybe some of the people who now afforded the high contract prices no longer have the excess money to keep taking all the vacations they planned with their DVC purchase. How common that becomes and collective timing has the potential to lower DVC prices. Just don’t know.

Yes there are a lot of factors tot hink about as wages (at least for middle/upper class families) are not increasing at the same pace.

 

[Heather07438]

Yes there are a lot of factors tot hink about as wages (at least for middle/upper class families) are not increasing at the same pace.

I wonder the same. Discretionary funds may lessen while discretionary costs rise. What will a family trip to WDW in 2025 cost.

 

[CaptainAmerica]

One factor to keep in mind is the borrowing restriction. *None* of the contracts that are either listed currently or have sold recently have been stripped. Stripped contracts sell for a lower PPP than loaded contracts, and right now everything is loaded.