Projecting future resale values

[Jlo85]

My point was that DVD can make a move that can cause the value of a contract to go down.

There are no absolutes and too many variables can play a role in what will happen.

Regardless of the resort, there is a always a chance if one has to sell short term you could end up taking a loss.

In that regard, it’s a good example of what can happen.

Obviously some resorts are better insulated to ups and downs long term but VGF isn’t the only one that saw a decrease in the average price using DVCRM data.

I guess the caution especially for direct buyers at Riviera and future restricted resorts is that if you finance, you may be underwater for the life of the loan. We’ll see if that changes. But that seems feasible to me. And it seems like it may even be intentional.

 

[Sandisw]

I guess the caution especially for direct buyers at Riviera and future restricted resorts is that if you finance, you may be underwater for the life of the loan. We’ll see if that changes. But that seems feasible to me. And it seems like it may even be intentional.

Underwater for me is selling and having to bring money to the table. So, depending on length of loan will determine that so as long as someone holds restricted resorts as long as they have the loan they won’t be underwater.

Assuming people do the 10 year DVC usually does, but that point, owners can sell.

Now, if you are talking underwater in the sense that they don’t get all the purchase price back? Yes, that is very possible

But it’s why I don’t think anyone should buy DVC, financed or not, assuming a resale value other than 0.

If one does that and figures out at what point it still makes sense against the cash stays one would replaced then what you can sell for down the road is a bonus.

When we bought in 2009 at BLT, we knew at 10 years in, we could sell for $0 and still come out ahead against our yearly trips. We figured we wanted to be in it longer than that so it was a good deal.

Of course, we have since added on, go more often, etc so there is no savings any more..but when or if we ever sell, whatever comes back is more than we expect. Which is $0.

 

[Jlo85]

Underwater for me is selling and having to bring money to the table. So, depending on length of loan will determine that so as long as someone holds restricted resorts as long as they have the loan they won’t be underwater.

Assuming people do the 10 year DVC usually does, but that point, owners can sell.

Now, if you are talking underwater in the sense that they don’t get all the purchase price back? Yes, that is very possible

But it’s why I don’t think anyone should buy DVC, financed or not, assuming a resale value other than 0.

If one does that and figures out at what point it still makes sense against the cash stays one would replaced then what you can sell for down the road is a bonus.

When we bought in 2009 at BLT, we knew at 10 years in, we could sell for $0 and still come out ahead against our yearly trips. We figured we wanted to be in it longer than that so it was a good deal.

Of course, we have since added on, go more often, etc so there is no savings any more..but when or if we ever sell, whatever comes back is more than we expect. Which is $0.

Yes, I guess it all depends on if Riviera resale increases in value over the next 10 years like other DVC resorts have historically.

It also begs the question whether DVC will be a good buy at all. As the direct price goes up, the savings become smaller. At $250/point in today's dollars (some resorts are already there), whether you will save any money over cash stays starts to be really questionable. Resale used to provide a cushion, but it might not in the future.

I think the legacy resort contracts are relatively insulated assuming availability doesn't become an issue. But Disney will probably apply proactive changes that will make the program less and less attractive.

 

[havoc315]

I guess the caution especially for direct buyers at Riviera and future restricted resorts is that if you finance, you may be underwater for the life of the loan. We’ll see if that changes. But that seems feasible to me. And it seems like it may even be intentional.

Financing is never wise at any resort, not direct or resale. The interest eats up the vacation savings. That's no different at Riviera than any other resort.

Getting into more advanced calculations that involve both the financing rate, the time value of money, etc. But anyway, unless DVC appreciates by more than the interest rate + the inflation rate, then you're losing when you finance.

So for example.. if you bought 4 years ago resale, at any resort, and financed at 10%... Say you bought at 150 per point, and it's increased in 4 years to $160 per point.. you actually lost $49 per point.

In most cases, you're better off just booking cash rooms than ever financing DVC.

 

[sethschroeder]

18% over 4 years is not “incredible”.. it’s slightly higher than historic rates which would be 10-15% over 4 years.

That's a 17% to 45% over normal historical rates so yes much higher and dramatic spikes during covid as well.

And inflation would cause resale prices to go up, not come down.

Actually spikes in inflation impact daily affordability and lowers disposable income. It bounces back long term though which is why long term inflation is not felt but sudden spikes are.

Going from 2,200 to 2,400 to 2,900 in just 5 years is indeed a big increase. A 32% increase in supply is just 5 years.

No not 32% because it's 5 years it would be 5% as it's 1% per year and that's not new owners simply contracts changing hands.

You have as example 100 million points for easy math. The 1% is not cumulative its simply 1% are sold via resale last year so 1 million points, 1% are sold this year so 1 million points, ect.

Additionally some of the 1% could already be resale points that are being sold again.

You are trying to cumulatively add which is not the 1%. The yearly average is simply 1% of all contracts in existence. The increase comes when new properties are brought in but again new properties are a small minority of total contracts that exist within DVC.

 

[DVCsloth]

Direct prices may rise as well with the inflation costing Disney more to build which would probably cause resale to rise. I'm sure it all depends on how the economy is in the future. There may be some decent resale prices in the near future, but they will more than likely rise

 

[E2ME2]

Direct prices may rise as well with the inflation costing Disney more to build which would probably cause resale to rise. I'm sure it all depends on how the economy is in the future. There may be some decent resale prices in the near future, but they will more than likely rise

There are other factors that could impact these projections. In the thick of COVID, panic struck, and resale prices tanked. In that same year, however, the economy made a fantastic rebound, and some folks received extra cash, and saved money by working from home. Those DVC owners that were negatively impacted and/or panicked, sold DVC points at greatly reduced prices.
I picked up 3 resale contracts in 2020 - 2021 at bargain prices. In 2022 the resale market rebounded strongly, and Direct & Resale prices have been on the high side all year. BUT, if inflation/recession hits a segment of the DVC owners this year, there might be another short term fire-sale on the horizon.
Personally, I'm really hoping to see some resale bargains on the 2042 resorts.

 

[tjkraz]

So let this simply be buyer beware -- I don't expect re-sale value to disintegrate into nothing. But don't go in with an expectation of significant resale. I'd go in with the expectations of a re-sale loss.

That's always been the risk...and a reasonable expectation.

Still, as long as the buyer is using the points for at least a couple years of vacations, they're very likely breaking-even or saving compared to an alternative of cash stays or point rentals. Buying a DVC resale, using the points for 2 or 3 years and then selling for a lower rate than paid probably shouldn't be viewed as a net loss. And isn't that why we buy DVC points in the first place?

Anyone speculating in DVC contracts or projecting a substantial return may be in for a rude awakening.

 

[Ms Bibbidi]

Underwater for me is selling and having to bring money to the table. So, depending on length of loan will determine that so as long as someone holds restricted resorts as long as they have the loan they won’t be underwater.

Assuming people do the 10 year DVC usually does, but that point, owners can sell.

Now, if you are talking underwater in the sense that they don’t get all the purchase price back? Yes, that is very possible

But it’s why I don’t think anyone should buy DVC, financed or not, assuming a resale value other than 0.

If one does that and figures out at what point it still makes sense against the cash stays one would replaced then what you can sell for down the road is a bonus.

When we bought in 2009 at BLT, we knew at 10 years in, we could sell for $0 and still come out ahead against our yearly trips. We figured we wanted to be in it longer than that so it was a good deal.

Of course, we have since added on, go more often, etc so there is no savings any more..but when or if we ever sell, whatever comes back is more than we expect. Which is $0.

Traditionally "underwater" means the owner/borrower owes more money remaining on their real estate purchase loan than they can obtain by selling the property.

 

[Sandisw]

Traditionally "underwater" means the owner/borrower owes more money remaining on their real estate purchase loan than they can obtain by selling the property.

Exactly. So the only ones who are ever underwater with a DVC purchase are those who have financed and have to sell before they have paid enough of it off.

 

[Cfabar1]

If Disney stays in high demand or high enough demand, people will still “buy in” to Riviera resale. Maybe not as much as other resorts, but there is something intrinsically appealing about going to disney once or twice a year as a family vacation, and having the ultimate convenience of a full kitchen, etc. and being “that close” to the parks.

The idea that they will be worthless I find hard to believe. I doubt you will ever see a DVC purchase for $1 on EBay Redweek for example. There’s enough value there that the floor will be much higher.

However, I could see those 2042 resorts causing the points value to plummet in resale for them, and by in large drag the resale value of other resorts further down with them because if OKW can be had for $80 per point, (for the sake of argument), why should I buy somewhere else for “only” five or ten more years at $200 a point.

I’d imagine the shorter contract period might actually be appealing for some families (go while the kids are ages 5-15 and then 2042 rolls along and we don’t have to pay for this Disney thing anymore).

 

[havoc315]

That's a 17% to 45% over normal historical rates so yes much higher and dramatic spikes during covid as well.




Actually spikes in inflation impact daily affordability and lowers disposable income. It bounces back long term though which is why long term inflation is not felt but sudden spikes are.



No not 32% because it's 5 years it would be 5% as it's 1% per year and that's not new owners simply contracts changing hands.

No… it’s 32% by your own estimates.

Going from 2200 contacts re-sold per year to 2700. 32% over 4 years. Or about 8% per year.
Which is huge— a much bigger increase than annual increases in attendance.

You have as example 100 million points for easy math. The 1% is not cumulative its simply 1% are sold via resale last year so 1 million points, 1% are sold this year so 1 million points, ect.

Now… if you add another 32 million points to the inventory … so 1,320,000 points are sold… that’s a 32% increase.

I’m going with your figures — not cumulative.
1% of all points are sold in a given year. So if you increase the total inventory of points by 32%, then you’re increasing the resale inventory by 32%.

Additionally some of the 1% could already be resale points that are being sold again.

You are trying to cumulatively add which is not the 1%. The yearly average is simply 1% of all contracts in existence.

I’m not being cumulative. You’re ignoring basic algebra.

For simplicity — let’s say you start with 100,000 contracts. And you double the number of contracts to 200,000…
So you apply your 1% figure to both:
1,000 resale contracts grows to 2,000 resale contracts.

As you already calculated — adding 500 resale contracts per year. So if you start with 2200 contracts… add another 500, that’s an increase of 32%.

The increase comes when new properties are brought in but again new properties are a small minority of total contracts that exist within DVC.

No, they aren’t. That’s the point - if you add 4 properties in a short time span, (Riv, VDH, VGF2, Poly2), that’s not a small increase. It’s an increase in points if about 30%.
As of 2020, there were 220,000 contracts. Adding those 4 properties adds about another 50,000-70,000 contracts — about a 30% increase.

 

[RichVIII]

So there is a 2042 Resort (BCV) contract that has been on the market a few days with under 50 points. Those things usually are gone in a day. It is delayed closed and no points till 2023. So are people pausing realizing that there is only 19 years of points based on the contract. If you take total costs to buy you land at $10.77 a point. Add in 7.53 a year in dues (based on 2022) dues and suddenly you are at $18.31 per point. Not trying to start the rent versus buy argument. I know everything goes up and if you love the resort you want the advantage to book there but I started to struggle a bit when I looked at the math on this. I am hoping to add a few small point contracts and I know they are less of a value but I have to believe these values will start to erode.

 

[Jlo85]

The idea that they will be worthless I find hard to believe. I doubt you will ever see a DVC purchase for $1 on EBay Redweek for example. There’s enough value there that the floor will be much higher.

I agree Riviera won’t be worthless.

But I think we’ll know the future a bit more with Poly 2. I don’t see this discussed much, but if Poly2 is as upscale as Riviera, I have a hard time seeing how it wouldn’t crash Riviera’s price. A monorail resort that’s also accessible to Epcot? I tend to think buyers will drift to that resort instead.

And that could be the reality going forward. Without SAPs, these resorts have to stand on their own in the resale market. And each new one will make each old one less valuable.

 

[RoseGold]

So if direct buyers start defaulting, Disney benefits. It’s kind of depressing, because it’s super predatory.

I mean yea, it's pretty much the standard, slimy timeshare playbook. Disney has been referencing it a lot lately. They have kiosks everywhere for a reason. Millions of RIV/Aulani points need to be sold.

I would have a hard time even selling resale right now.

 

[Sandisw]

I agree Riviera won’t be worthless.

But I think we’ll know the future a bit more with Poly 2. I don’t see this discussed much, but if Poly2 is as upscale as Riviera, I have a hard time seeing how it wouldn’t crash Riviera’s price. A monorail resort that’s also accessible to Epcot? I tend to think buyers will drift to that resort instead.

And that could be the reality going forward. Without SAPs, these resorts have to stand on their own in the resale market. And each new one will make each old one less valuable.

I have done the Epcot monorail from TTC having stayed at all the MK resorts.

It is in no way comparable to Skyliner from RIV to Epcot.

Poly tower will be popular for those that want to be in the MK area. And it will sell well with restrictions.

Remember that the Poly tower is in the other side of Poly so the walk to TTC is going to be at least 10 to 15 minutes and then need to add in the wait and ride on the monorail.

I’m just not sure it will be seen as a huge advantage for those that have Epcot and HS at the top of list to make them buy that vs RIV.

Now, I do have a feeling it will do better against RIV than VGF currently is because of being full of all size rooms and it’s own amenities right in that building.

I do agree we will have a much better idea of where RIV and future resorts with restrictions will land once we have more in the system and we see what other moves DVD could make.

 

[Sandisw]

I mean yea, it's pretty much the standard, slimy timeshare playbook. Disney has been referencing it a lot lately. They have kiosks everywhere for a reason. Millions of RIV/Aulani points need to be sold.

I would have a hard time even selling resale right now.

If you are talking about financing, That has been part of their promotions forever..letting new buyers know how easy it is to finance their purchase and it’s only X dollars a month.

 

[Cfabar1]

The fact of the matter is financing will be a huge part of their game. It has to be. The number of clients who want to get a large benefit of a number of years of vacations (particularly in 1 or 2 bedrooms because of the “value”, bigger room, privacy, etc.), plus the clients that will regularly return to Disney World over the next 10-30 years, plus those who can pay cash and not require some financing, are an incredibly small group of people percentage-wise. Financing helps people feel like they can “buy in” to the Disney lifestyle, even if they don’t have the $50k (or whatever number depending on points) to make them part of the lifestyle.

I will probably take some grief, but I feel that way about the studio units in many instances. At that point, why be tied down to Disney? The units with full kitchens, and larger accommodations i get, but I have a harder time justifying the studios vs. say the Swan or Swan reserve.

 

[Sandisw]

The fact of the matter is financing will be a huge part of their game. It has to be. The number of clients who want to get a large benefit of a number of years of vacations (particularly in 1 or 2 bedrooms because of the “value”, bigger room, privacy, etc.), plus the clients that will regularly return to Disney World over the next 10-30 years, plus those who can pay cash and not require some financing, are an incredibly small group of people percentage-wise. Financing helps people feel like they can “buy in” to the Disney lifestyle, even if they don’t have the $50k (or whatever number depending on points) to make them part of the lifestyle.

I will probably take some grief, but I feel that way about the studio units in many instances. At that point, why be tied down to Disney? The units with full kitchens, and larger accommodations i get, but I have a harder time justifying the studios vs. say the Swan or Swan reserve.

While I don’t do studios much any more, when we bought the goal was to be on property still and staying at other places, even the Swan was not the same.

It goes back to spending your money on what will make you happy and some things aren’t the equivalent.

We almost financed when we bought but ended up not needing to but we went in with a different mindset. We had a yearly budget for our stays at WDW for the room..we were at CR 85% of the trips we’d been taking almost yearly for 15 years before buying.

At the time, even with financing, we could buy BLT and not go over that budget and in 10 years when the loan was paid, our expenses would go down.

We knew we’d visit long after that so it made sense to spend our money this way.

I think it just all depends on what works for you and for many, studios do.

 

[Sunnyore]

So there is a 2042 Resort (BCV) contract that has been on the market a few days with under 50 points. Those things usually are gone in a day. It is delayed closed and no points till 2023. So are people pausing realizing that there is only 19 years of points based on the contract. If you take total costs to buy you land at $10.77 a point. Add in 7.53 a year in dues (based on 2022) dues and suddenly you are at $18.31 per point. Not trying to start the rent versus buy argument. I know everything goes up and if you love the resort you want the advantage to book there but I started to struggle a bit when I looked at the math on this. I am hoping to add a few small point contracts and I know they are less of a value but I have to believe these values will start to erode.

I just picked up a BCV small point contract with just enough points for me to book some days for studios during Epcot Festivals. I accepted the fact that it isn’t great value with my price per point at $16.22, but it gives me what I want. I don’t plan on selling either so I’m just really looking at me prepaying for the next 19 years and being able to get the rooms cheaper than rack rates and probably renting too. So I’m not going to worry much where the resale value is heading since it’ll be $0. But ya, I did notice the contract sat for a few days before I took it. But the one I was looking at the week before was gone within the same day.