Projecting future resale values

[havoc315]

There was a bubble - just like in homes

Do a 5 and 10 year trend not 12/months

So taking your point, I looked at 4 years.
August 2018 to August 2022: (Inflation has been 18% over the last 4 years combined).

	Aug 2018 prices	With 18% inflation	Actual Aug 2022	actual change
AKL	112	132.16	133	0.60%
BLT	141	166.38	169	1.50%
BCV	138	162.84	174	6.80%
BWV	129	152.22	148	-2.80%
BRV	106	125.08	121	-3.30%
CCV	155	182.9	166	-9.30%
VGF	166	195.88	174	-11.10%
OKW	103	121.54	120	-1.30%
POLY	161	189.98	166	-12.70%
SSR	101	119.18	130	9.10%

So BCV has appreciated almost 7% in the last 4 years.. SSR has appreciated 9% over the last 4 years.
Every other resort is flat or down.
CCV, POLY and VGF are down significantly.
BWV and BRV are both modestly down. While BLT, AKL and OKW are about flat. (less than a 2% change over 4 years). AKL has almost perfectly tracked inflation, price staying entirely flat.

So as we go back even 4 years, we really aren't seeing much DVC appreciation.

 

[havoc315]

What "massive increase" are you talking about? A couple hundred Poly rooms? Or the DLT, which would probably already be completely booked if it were open. Cuz that's it for two years.

DVC has gone over a couple decades from a few thousand owners to a few hundred thousand.

A couple hundred rooms at Poly, a couple hundred room at VDH, a few hundred at Riviera and VGF...

That's about another 50,000 DVC owners.

So yes, adding another 50,000 contracts is a pretty massive increase.

Demand is there. Just scroll on Facebook and you'll see all the people who want points. Sure, they don't want to spend five figures on it.

Bingo!!!

 

[Nursemanit]

So taking your point, I looked at 4 years.
August 2018 to August 2022: (Inflation has been 18% over the last 4 years combined).

	Aug 2018 prices	With 18% inflation	Actual Aug 2022	actual change
AKL	112	132.16	133	0.60%
BLT	141	166.38	169	1.50%
BCV	138	162.84	174	6.80%
BWV	129	152.22	148	-2.80%
BRV	106	125.08	121	-3.30%
CCV	155	182.9	166	-9.30%
VGF	166	195.88	174	-11.10%
OKW	103	121.54	120	-1.30%
POLY	161	189.98	166	-12.70%
SSR	101	119.18	130	9.10%

So BCV has appreciated almost 7% in the last 4 years.. SSR has appreciated 9% over the last 4 years.
Every other resort is flat or down.
CCV, POLY and VGF are down significantly.
BWV and BRV are both modestly down. While BLT, AKL and OKW are about flat. (less than a 2% change over 4 years). AKL has almost perfectly tracked inflation, price staying entirely flat.

So as we go back even 4 years, we really aren't seeing much DVC appreciation.

Your forgetting that 4 years is 8% of the total product consumed - This is not an ounce of gold that is still an ounce of gold. This is a consumable pile of points that reduces each year
Edit - 8%

 

[RoseGold]

Right, so as the 2042s start to age out, they start to look even tastier to people who don't want to have this thing for decades and don't have 30K to do this. And they will hold value. Right now, there is no 8 year DVC option. If there were one, it might have been the option I took.

If I could do it again, I would have bought BLT points over SSR. I didn't appreciate how easy it is to rent and how valuable the booking categories are. Right now, I would have a hard time telling anyone to buy. But not because I think a couple hundred Poly rooms in a couple years are going to overwhelm the system. That makes zero sense to me.

 

[havoc315]

Your forgetting that 4 years is 8% of the total product consumed - This is not an ounce of gold that is still an ounce of gold. This is a consumable pile of points that reduces each year
Edit - 8%

Not forgetting at all! That's one of the reasons I cited as WHY the resale prices will go down.

Though your 8% isn't actually the number for each resort. And a year 30 years from now doesn't have the same value as the current year.
A 2042 resort is now losing "5% per year", while a 2062 resort is losing "2.5% per year"...

 

[Jlo85]

I question the demand is dropping. Disney posted revenue up 72% and profits up 50% last quarter. There is really no sign that demand is abating.

I think DVC will track with Disney and the real estate markets. If there is demand for Disney and real estate, there will be demand for DVC (new or resale). And people have said both have been crashing for years, but neither has really happened. Never bet against the mouse.

 

[havoc315]

Right, so as the 2042s start to age out, they start to look even tastier to people who don't want to have this thing for decades and don't have 30K to do this. And they will hold value.

On the contrary -- They look tasty if they are CHEAP. If the prices drop, people may buy them. Supply and demand.

Obvious example ..... it's 2036, you can buy 5 years worth of points at Boardwalk.
You can rent points at $20 per point.
Why would it be "tasty" to pay the current price of $150 per point? When you can rent the points for only $100?
Or, where you can buy a 2070 contract for $150 per point?

For Boardwalk to remain "tasty", the price would have to drop significantly.

Right now, there is no 8 year DVC option.

Really... so if your choice was to buy a 8-year DVC contract for $20,000, or a 50-year DVC contract for $20,000... or rent DVC/cash rooms for 8 years for $15,000.... you'd buy the 8 year contract?

I would think any rational consumer, even if they only wanted 8 years... if 50 years was the same price, they would buy the 50-year contract and then re-sell it after 8 years.

 

[havoc315]

I question the demand is dropping. Disney posted revenue up 72% and profits up 50% last quarter. There is really no sign that demand is abating.

COMPARED TO COVID.

And what does that say -- Re-sale prices have DROPPED by 10-20% WHILE Disney increased revenue massively...

I think DVC will track with Disney and the real estate markets.

Well, that's not true over the last 4 years. Over the last 4 years, DVC re-sale has lagged significantly behind Disney and the real estate markets.

Maybe you're guessing that in the future, it will track those markets. But history of the last 4 years is that it does NOT track those markets.

 

[RivShore]

A few things to remember:

DVC is NOT and investment. The smart buyer assumes the residual/resale value will be zero as soon as they walk out of the sales room. This is how every other timeshare works, so it is prudent to assume the same with DVC.

A 10% drop is usually considered a correction and a 20% drop a bear market. We could be in correction territory and would assume DVC resale value would follow the housing market in general. Certainly for those who finance, interest rate increases will impact what they would consider paying. So a downward trend would not be surprising.

Doing an exercise like this at this time is suspect - the economies of the world have not been "normal" for 3 years and it will probably take another 3 years to get anywhere near normal again. To draw long term predictions from the current state is kind of crazy LOL. Think about where sales of Riviera would be if Covid never happened and the economy of 2019 was still humming along (record low unemployment, low inflation, stable stock market, etc.). It would be much closer to sold out today.

But given our population isn't growing massively.... given that it's not like Disney is going to get massively more popular as a destination than it already is....
Heck, even given global warming making Orlando a less hospitable place over the next 20 years..

It's hard for me to imagine demand growing enough to match the massive increases in supply.

And this - I am sure similar things were said on this very site over the last 20 years many times and attendance just kept breaking records...are we living in the special times where it finally comes true?

 

[Nursemanit]

Not forgetting at all! That's one of the reasons I cited as WHY the resale prices will go down.

Though your 8% isn't actually the number for each resort. And a year 30 years from now doesn't have the same value as the current year.
A 2042 resort is now losing "5% per year", while a 2062 resort is losing "2.5% per year"...

But appreciation in value is the price paid for each remaining contract point - So my point was your table is misleading

 

[Sandisw]

So taking your point, I looked at 4 years.
August 2018 to August 2022: (Inflation has been 18% over the last 4 years combined).

	Aug 2018 prices	With 18% inflation	Actual Aug 2022	actual change
AKL	112	132.16	133	0.60%
BLT	141	166.38	169	1.50%
BCV	138	162.84	174	6.80%
BWV	129	152.22	148	-2.80%
BRV	106	125.08	121	-3.30%
CCV	155	182.9	166	-9.30%
VGF	166	195.88	174	-11.10%
OKW	103	121.54	120	-1.30%
POLY	161	189.98	166	-12.70%
SSR	101	119.18	130	9.10%

So BCV has appreciated almost 7% in the last 4 years.. SSR has appreciated 9% over the last 4 years.
Every other resort is flat or down.
CCV, POLY and VGF are down significantly.
BWV and BRV are both modestly down. While BLT, AKL and OKW are about flat. (less than a 2% change over 4 years). AKL has almost perfectly tracked inflation, price staying entirely flat.

So as we go back even 4 years, we really aren't seeing much DVC appreciation.

Hasnt ROFR been at a higher rate over the past two years at some of those properties?

So, we should at least consider that, shouldn’t we?

Personally I think that had helped AKV and SSR grow in price.

And while DVD will always use ROFR, if they decrease their buying, wouldn’t that slow things in terms of increase in value?

 

[havoc315]

Hasnt ROFR been at a higher rate over the past two years at some of those properties?

So, we should at least consider that, shouldn’t we?

Personally I think that had helped AKV and SSR grow in price.

And while DVD will always use ROFR, if they decrease their buying, wouldn’t that slow things in terms of increase in value?

Correct.... If there are 4-5 resorts where Disney is not exercising ROFR, that can drag down prices throughout. (If Poly prices go down, that drags down BLT too, as those simply looking for a monorail resort may go to whatever monorail resort is cheapest).

 

[havoc315]

A few things to remember:

DVC is NOT and investment. The smart buyer assumes the residual/resale value will be zero as soon as they walk out of the sales room. This is how every other timeshare works, so it is prudent to assume the same with DVC.

A 10% drop is usually considered a correction and a 20% drop a bear market. We could be in correction territory and would assume DVC resale value would follow the housing market in general. Certainly for those who finance, interest rate increases will impact what they would consider paying. So a downward trend would not be surprising.

Doing an exercise like this at this time is suspect - the economies of the world have not been "normal" for 3 years and it will probably take another 3 years to get anywhere near normal again. To draw long term predictions from the current state is kind of crazy LOL. Think about where sales of Riviera would be if Covid never happened and the economy of 2019 was still humming along (record low unemployment, low inflation, stable stock market, etc.). It would be much closer to sold out today.


And this - I am sure similar things were said on this very site over the last 20 years many times and attendance just kept breaking records...are we living in the special times where it finally comes true?

Some excellent points. I don't necessarily agree, but I will fully admit that my projections include a healthy amount of speculation and unknown.

 

[Jlo85]

Over the last 4 years, DVC re-sale has lagged significantly behind Disney and the real estate markets.

I’m not a stock expert, but these lines look similar to me.

 

[Nursemanit]

Hasnt ROFR been at a higher rate over the past two years at some of those properties?

So, we should at least consider that, shouldn’t we?

Personally I think that had helped AKV and SSR grow in price.

And while DVD will always use ROFR, if they decrease their buying, wouldn’t that slow things in terms of increase in value?

ROFR ( or the lack of it ) is a reasonable cause for price differences between resorts. The value of PVB is probably near 100% market-driven, whereas SSR is not.

You can make the argument that you consider DVC to be a " buyer" making market decisions to purchase. However unlike any other buyer - DVC can break up contracts, extend the end date, and add value (blue card) So I don't consider this a reasonable assumption.

 

[havoc315]

I’m not a stock expert, but these lines look similar to me.

View attachment 702874
View attachment 702875

I’m not a stock expert, but these lines look similar to me.

View attachment 702874
View attachment 702875

4 years.. not 1 year. And an index fund isn't a substitution for the real estate market -- As dividends are taken OUT of the fund.

Here is the fund you cited over 4 years. Now. to actually compare it to a DVC valuation correlation, you'd have to add back in all the value of the paid dividends over those 4 years.

Very roughly, about $12 per share in dividends have been paid on 1 share over those 4 years.

So, if you invested $83 in VNQ on August 31, 2018, as of August 31, 2018, your total return would be $18 per share... Of course, adjust for inflation, just like we did with DVC....
Over 4 years, VNQ was about a 4% return, while a purchase of Boardwalk Villas would have been -3%, Poly -12%. Of the 10 WDW DVCs analyzed, 8 out of the 10 underperformed VNQ.

 

[RivShore]

Some excellent points. I don't necessarily agree, but I will fully admit that my projections include a healthy amount of speculation and unknown.

That describes about 99.9% of the interwebs

Just trying to bring some levity to all this number talk.

 

[Jlo85]

Not really comparing buying stocks to DVC, more just comparing it to the market performance. Hard to say DVC is underperforming this year when the whole market is underperforming this year.

I am of the mindset the DVC value is more impacted by Disney and the real estate market than any specific resort or DVD rule, and that’s how buyers should consider it. If you have faith in Disney and real estate, then it’s a good buy. If you don’t, then don’t. And my feeling is never bet against the mouse.

 

[Sandisw]

ROFR ( or the lack of it ) is a reasonable cause for price differences between resorts. The value of PVB is probably near 100% market-driven, whereas SSR is not.

You can make the argument that you consider DVC to be a " buyer" making market decisions to purchase. However unlike any other buyer - DVC can break up contracts, extend the end date, and add value (blue card) So I don't consider this a reasonable assumption.

I agree that they play a big role in what we may or may not see with prices

So near park resorts will conman’s what they command without as much impact on price but places like SSR, etc. will

Even the 2042 resorts have seem form ROFR these past few years that didn’t seem to be there years ago which may have played some role. I mean DVD was letting sub $120 pass in 2020.

It just goes to show that DVD and decisions can impact things for particular resorts differently!!!

 

[RivShore]

Not really comparing buying stocks to DVC, more just comparing it to the market performance. Hard to say DVC is underperforming this year when the whole market is underperforming this year.

I am of the mindset the DVC value is more impacted by Disney and the real estate market than any specific resort or DVD rule, and that’s how buyers should consider it. If you have faith in Disney and real estate, then it’s a good buy. If you don’t, then don’t. And my feeling is never bet against the mouse.

I would also narrow it down to just enjoyment of the parks. If you have faith that you and your kids will get the full ~50 year use out of the product, nothing else matters.
And, one thing that is certain, you will be happy when you compare what a cash night costs in 2070 vs. what you (or your parents) paid for that night in 2020, even with inflating fees.