Long Term Price increase in DVC??

[Quadman]

IF I have read the posts right it seems that the original DVC owners buying in around 1992 paid appx $ 55.00 per pt. Now the resale market (And DVC ROFR) is getting $ 70-74 per point, this is not a bad increase on a time share..... But I feel that the market is controlled by DVC through their new sale prices and their exercising their ROFR. They could drive the prices wherever they wish in the coming years (within limits of market demand)

So the question is this; what do you think the value will be on the resale market (or through DVC ROFR) of a point at SSR in 15 years?

Just a few of the things to be taken into account;
1) DVC willingness and ability to continue to build DVC resorts or to make other arrangements that satisfy capacity
2) Potential market saturation for DVC
3) The interesting variable of diminishing returns as there are less years in which you can use your pts. You know....only 35 yrs left on a 50 yr SSR contract.
4) DVC's ability to change the contract duration for new resorts, for instance DVC is now selling contracts at SSR for 50 years, but in 15 years with 35 years remaining on an SSR contract DVC COULD be selling new resort contracts with 75 yrs, or even move to a more traditional time share ownership mentality, who knows

There are many other thoughts to be taken in account to be sure, and I'd love to hear some of them from you....

I know in the end the DVC purchase is more of an emotional one (at least it was for us), but you can't help but want to play with the numbers. I wonder if DVC 12 years ago projected that owners would be able to sell their points back on the open market for a profit. You've got to imagine they did forecast it, but then you've got to ask what they are forecasting now for 15 years down the line and what their strategy will be to deal with it to their advantage......

Anyway.... Just a thought......Could be an interesting discussion......

 

[spiceycat]

in the year 2035 and after - I think if WDW is still popular - then DVC will simiply buy back any that they feel is too low.

Why?

the contract runs out in 2042 (except SSR) - DVC does not want a bunch of buyers who will fight their maintence fees - not when WDW can rent the property for more - the way the WDW resort prices are going up - WAY MORE.

now if it is not popular or the economy is during bad - then I think about that time - they will let the present DVC member continue their contracts by paying more for them.

if WDW is just as popular if not more and the economy is in good shape - no way will DVC let the DVC resorts decrease in value.

Sorry!

 

[tjkraz]

All things being equal, supply and demand will rule and there will still be interest in DVC contracts.

However, it's hard telling what might happen when (if) DVC decides to get out of the point sales business. They could conceivably take actions which would make DVC less desirable to folks simply looking for WDW accommodations, such as:

- Limiting bookings to Home resort.
- Changing booking windows.
- Driving up the member dues via resort refurbishments, etc.

...and a host of other things I simply can't think of right now.

There are many reasons to think that Disney would not want to alienate such core customers, and many more reasons that could be used to justify such actions. The scariest prospect is that "Disney" will probably not always be the company that it is today (just as it isn't the same company it was yesterday.) It was just 6 months ago that some folks were quaking in their boots over the Comcast stock offer.

Only time will tell...

 

[disneyberry]

<font face="times" size="+0">Never take the resale market (or the rental market, for that matter) for granted.

Don't buy DVC assuming you'll be able to use it for a while, and then sell it off in the resale market for a good price.

Anyway, you can't really predict this kind of stuff. It's just as bad as trying to calculate break-even. It can drive you nuts, doing calculations on all the assumptions. </font>

 

[HUFF590]

Im sorry I must be crazy, Im a new member And I cant understand why anyone cares about break even can I sell at a higher price etc etc, IMHO I just bought in to have the best vacation ever.

 

[Quadman]

Originally posted by HUFF590
Im sorry I must be crazy, Im a new member And I cant understand why anyone cares about break even can I sell at a higher price etc etc, IMHO I just bought in to have the best vacation ever.

Hey Barron... You're not crazy just not looking straight (sorry, just trying to be funny).... but if you want the best vacation ever, just pay cash for the biggest suite they have at each of the deluxe resorts.....

Why would you not do this...?? Well I suspect it could be some feeling of too much cost for the value that you would derive from that experience.... so even if it's a fleeting one, you have made a financial analysis

I’m just trying to do the same……..And not really to any specific ends….we just bought too for the same reasons as you did….. Now just doing a little post mortem number crunching.

 

[spiceycat]

I agreed I brought back in 93 - when even WDW didn't really think that DVC would be around - I remember being told quite frequently that Disney might not always be the managing company.....

I don't think the rest of WDW appreciated the DVC member until 9/11 - then when DVC owners were still coming - when some many guests were cancelling....

Now of course - the opposite reaction - some people seems to think you gotta to be rich.....NOT!!!!

 

[rinkwide]

Originally posted by Quadman
So the question is this; what do you think the value will be on the resale market (or through DVC ROFR) of a point at SSR in 15 years?

I see it as an economic tug-of-war:

Past Performance Is No Indication Of Future Gain

VS

Location, Location, Location

Personally, I think Walt Disney World will continue to be the premier family vacation destination for the next 15 years so I lean toward the latter (Plus, last time through the HM, I'm pretty sure I heard Madam Leota say SSR will be trading at $138 in 2020).

 

[Quadman]

Originally posted by rinkwide
I see it as an economic tug-of-war:

Past Performance Is No Indication Of Future Gain

VS

Location, Location, Location

Personally, I think Walt Disney World will continue to be the premier family vacation destination for the next 15 years so I lean toward the latter (Plus, last time through the HM, I'm pretty sure I heard Madam Leota say SSR will be trading at $138 in 2020).

See, now there is the kind of logic that works well in my male justification spreadsheet...... WOW... we can't afford not to buy more pts......

 

[timC]

Personally, I think Walt Disney World will continue to be the premier family vacation destination for the next 15 years so I lean toward the latter (Plus, last time through the HM, I'm pretty sure I heard Madam Leota say SSR will be trading at $138 in 2020).

Assuming 3% inflation, $138 would be about right... in PV terms, SSR should be trading at about $89. Hmmm.. And that assumes supply/demand equation is constant, and WDW theme park attendance continues to expand to account for the increasing resort capacity.

I don't think WDW will continue to expand as it as done over the past dozen years... Therefore all bets are off.

DVC... Great vacations....lousy investment.

 

[manning]

Can't say, the crystal ball went cloudy.

 

[DrTomorrow]

Originally posted by rinkwide
(Plus, last time through the HM, I'm pretty sure I heard Madam Leota say SSR will be trading at $138 in 2020).

I just checked on the Internet, and rinkwide's absolutely correct!

Here's what Madame Leota says, word for word:

Serpents and spiders, tail of a rat
Call in the spirits, wherever they're at.

Rap on a table, it's time to respond,
Send us a message from somewhere beyond.

Goblins and ghoulies from last Halloween
Awaken the spirits with your tambourine.

Creepies and crawlies, toads in a pond
Let there be music from regions beyond.

Wizards and witches wherever you dwell
Give us a hint by ringing a bell.

Buy your add-on points now, be sure to get plenty
For they'll cost $138 in 2020.

 

[HUFF590]

Quadman your right everyone crunches numbers.I just like to see how many different reasons the dissers can come up with to buy in. But I still will never look at money or numbers, I try to keep my head empty for points planning lol.

 

[disneyberry]

Originally posted by Quadman
See, now there is the kind of logic that works well in my male justification spreadsheet...... WOW... we can't afford not to buy more pts......

<font face="times" size="+0">Wait, why "male justification"? What's that supposed to mean?

Anyway, I don't blame anyone who wants to crunch the numbers just for fun. I did it myself, but got to the point that it was frustrating me too much, so I just filed my spreadsheets away. After months of tweaking them, they got so jumbled that I couldn't look at them anymore anyway.

The forecast for resale prices in 15 years depends on way too many factors. How long it takes SSR to sell out. Whether there will be another DVC resort after SSR. If not, then resale prices will drop, since Disney probably won't invest so much effort into ROFR anymore. Also, there's not enough data now to tell just how low Disney will let the DVCI resorts sell for on the resale market. SSR resales are only starting to appear on the market, so I think we'll need to wait at least another year before making a better educated guess at anything.

But regardless, my original reply was geared toward prospective buyers. Basically a warning that DVC shouldn't be treated as a financial investment.</font>

 

[SoCalKDG]

Resale will also be tied to room costs as well, especially BW, BC, and WL. If, in 15 years, room prices were $400 to $500 for these resorts, then the value of a 12 point room at one of these resorts will go up. This would be balanced by the fact that there would only be 23 years left, but breakeven would be much quicker.

Points might be renting for $20 per point at this time, and breakeven might only be 5 years on a $125 per point contract.

Now if room prices don't go up, instead staying the same, then you would see resale prices go down.

As long as DVC rooms are connected to resort rooms the fate of resale prices will be tied to room rates.

 

[Quadman]

Originally posted by disneyberry
<font face="times" size="+0">Wait, why "male justification"? What's that supposed to mean?

To me anyway - Male Justification is when you stack the deck on the side that you'd like to see come out ahead. And you stack it with things that really should not be there and you know it, or things that have already been entered into the calculation in one way or another and you don't care 'cause you know it's good for the calculation that you would like to see win....... Welcome to my world.... Two nights on a spreadsheet so I can fudge it to show DVC as the obvious winner.

 

[spiceycat]

I have all ready saved several thousands - so it doesn't matter much to me.

After SSR is brought out if DVC is still selling - now it is selling like hotcakes -

then the one I hope for and still do - might be Contemporary - would love it - or they will go back to Eagle Pines - this one will be even larger than SSR (I think!)

If they do the Cont I really expect the price to increase - of course my guide say it didn't increase alot for VWL or BCV - both very popular resorts before DVC was added.

so here is hopeing!!!!

 

[rinkwide]

Originally posted by DrTomorrow
Buy your add-on points now, be sure to get plenty
For they'll cost $138 in 2020.

And I'm told, if you look closely during Spaceship Earth, you'll notice Michelangelo putting the artist rendering of SSR up on the Sistine Chapel.

 

[Quadman]

Originally posted by DrTomorrow
Here's what Madame Leota says, word for word:


Buy your add-on points now, be sure to get plenty
For they'll cost $138 in 2020.

Ya gotta wonder tho before making the calcs for the new points if Madame Leota just picked 2020 cause it rhymed?!?!

 

[Kick it up a notch!]

As I am sitting in my Old Key West 2 BR villa, using the added High Speed Internet Access, looking at the new DVD player under the TV and reading this post in the living room while my wife and kids are asleep in the other rooms I count myself amongst the luckiest people alive. Those who saw DVC early enough to know it was a bargain, and before Disney saw it as a cash cow.

It seems to me that they are always looking to increase market share and with DVC they have done just that, while getting the faithful to pony up the cash upfront to pay for the construction of these resorts.

I bought three contracts total about 4-6 years ago, and paid less than $63 per point to do it. Now, I look at Saratoga Springs and ask myself, "Self, would you pay $95 per point for your DVC?" You have to understand I love my DVC and would never think of parting with it, ever. I own 600 points total, and with six years of DVC experience under my belt, I really can't say I would plunk down almost $60,000 for these points without haveing to think about it, a lot. My wife and I probably make about 25%more than we made when we originally purchased, we could afford to buy it, I just don't know that we would. That is a lot of money, and I am surprised that so many are paying the $95 per point. I don't look at it as an investment in real estate, but rather as an investment in memories. $60,000 could buy me a lot of memories somewhere else too. I am all for DVC, but there must be a price point that people will not pay, I just wonder what that is.