Monetary value of DVC package: when will it start going down?

[steve_w]

I know that the primary purpose of buying into DVC is to enhance your and your family's vacations. However, DVC is also an investment, and as such, should at least be somewhat subject to a cost analysis to determine its value over the life of the package (if, for example, you decide a few years down the road that you can no longer take advantage of DVC).

Disney's room rates have historically increased every year. The cost of buying into DVC has also increased yearly. However, since the termination date of the DVC does not change, there has to be a point at which the value of DVC points starts decreasing. Has anyone done this? If so, would you be willing to share the information with the rest of the community?

 

[Raising Disney Princesses]

It will be interesting to see how the "market" determines when pricing begins to decline. However, for us, the price we paid for our DVC membership is appropriate if the life of our membership exceeds 8 years. We arrived at that by calculating our payback on our capital outlay. Considering the cash outlay to purchase the points, our financing costs and maintenance expenses we figured that we would breakeven on this purchase in 7 years (assuming we would continue taking the same number of Disney vacations and staying at DVC rather than any of the cash resorts and assuming an inflation rate for cash resort prices). After 7 years, our accomodations will just cost us our maintenance and taxes. So as long as DVC has a life of over 7 years (for us) it is worth the investment. Each individual will have different paybacks since the number of vacations and the price people would normally pay for accomodations during a vacation may vary among individuals.

Hope this helps!

 

[RobDoc]

Good question! I used to think that the resale prices would drop when DVC stops using their right-of-refusal on contracts- since that effectively sets the low limit for resales.

I still think that is the case, but also begin to wonder if that will happen. I believe the reason for that practice is to minimize sales competition with new sales. Until DVC (or any subsequent organization) stops building and selling new DVC, DVCII, DVCIII, etc resorts, there will always be a reason to prop up the resale market. Once DVC (et al) sells the last contract, I think resale prices may also rise. I was surprised when it was reported that DVC "raised" the resale limit- but since thinking about that- it does make sense.

Doc
doc@wdwinfo.com

 

[jctwizzer]

We have never viewed DVC as an investment. For us, it's a prepaid vacation. It will pass on to our heirs when the time comes. Consequently, the point at which the market value starts going down is meaningless to us...Anyone else see it that way??

 

[spiceycat]

I agree, I have already gotten my money worth in the last 7 years out of it. I love staying there and I would even if I was not a member. But I am a member so it is a great deal for me. (now if I could stop buying the new DVC, I would be fine).

 

[mickey7861]

We go to WDW yearly anyway. By purchasing DVC we just upgraded our vacations. Instead of staying at a moderate resort (now $129-169 nightly)we're able to stay in "suites" that we consider better than some of WDW's "deluxe" hotels. We never stay off site so DVC was a great way to upgrade our travel plans without worrying about the next price increase. Our only regret is that we didn't buy into DVC years ago when the salesmen were "everywhere" begging you to take a tour. Oh well we still have 42 years to play.

 

[DOOGIERUNNER]

Unlike most of our major purchases/investments, we did not consider the return on our $$ regarding DVC. We are your typical middle class family, two incomes, a busy schedule, frugal in many areas. When I was a child, my folks always took the family on a vacation to the same lake in northern Wisconsin. It feels like a second home there and I will cherish the memories forever. I would like to build the same memories for my children. Although we still continue to go to my childhhood vacation stomping ground and enjoy it, we love Disney as well. Spending time w/ family and building memories is not about $$. Once you arrive on-site, there's not a care in the world. It's 50 square miles of relaxation, a wonderful atmosphere and great service. I don't think we'll ever regret spending our money on DVC!!

 

[vernon]

Why assume the price has to fall at all?

Given that hotel rates have increased at 8% per year a moderate ( for arguments sake lets say costs $120 a night at the moment. If that continues for the next 40 yearsish years in 2030 a moderate will cost $1035 a night, in 2035 $1521 a night and in 2040 $2235 a night. Dues have risen at less than 5% per year but using 5% as the increase dues in 2030 will be $16.46 per point,2035 $ 21.01 per point , 2040 $26.84 per point. I know you can get rooms for less points but I'm going to say a studio requires 12 points per night. DVC points cost remains $72 per point (I'm doing just for one night but obviously this multiplies up for the number of nights required.

Comparative cost in 2030
Hotel room ONE NIGHT $1035 + tax @ 11%= $1148

To buy 12 DVC points costs $864 + dues 197.52(12x16.46) = $ 1061
So you could buy 12 years of DVC points for less than the cash cost FOR ONE YEAR ( granted you will have to pay dues for 12 years but the points for the remaining 11 years are effectively free.

2035
Hotel room ONE NIGHT $1521 +tax @11%= $1688
12 DVC points $864 + dues $252.12 (12x21.01) = $1116.12
7 Years of points left and it's $500 cheaper than the cash price for ONE YEAR's cash cost

2040
Hotel room ONE NIGHT $ 2235 + tax @11%= $ 2480.85
12 DVC points $864+ dues $322.08 (12x26.84)= $1186.08
2 more years of DVC, enough saved to pay ALL remaining dues so 2 more years of FREE holiday

Please note that I am using the price of a MODERATE NOT the cash cost of a superior ,IMHO, DVC resort.

IMHO at ANY of those stages DVC still looks a good buy, so I don't see any reason why it is correct to say the absolute value of a DVC point has fall AT ANYTIME. UNLESS WDW ceases to be a much desired vacation destination.