Projecting future resale values

[havoc315]

Don’t forget closing costs are a constant regardless of number of points or years.
$1,000 in closing costs are easy to dismiss when spread over 20 years, but not when spread over 3-5 years.

Imagine it’s 2038… you can get a BCV contract with 150 points per year for 3 years. Just in closing costs, you’re paying $2 per point per year. Throw in dues… basically, to break even with renting points, the cost would need to be under $30 per point. ($10 per point per year).

Sure.. if a seller is dumping points at $20 per point, might be worth snatching them up.

 

[Cfabar1]

Chances of Disney letting those $20/point pass ROFR is extremely low, but they might go for it, get some MFs for a few years, and then call it a day.

Do owners have any recourse to ensure the property stays in good repair and is up to date? I’d imagine the final 5 years Disney could get quite stingy with what maintaining the property looks like, especially since for many of these properties a refurb or sale of the property is all but guaranteed. As much as I’d love to see HHI and VB stay in the portfolio, I think they will disappear.

 

[Sandisw]

Chances of Disney letting those $20/point pass ROFR is extremely low, but they might go for it, get some MFs for a few years, and then call it a day.

Do owners have any recourse to ensure the property stays in good repair and is up to date? I’d imagine the final 5 years Disney could get quite stingy with what maintaining the property looks like, especially since for many of these properties a refurb or sale of the property is all but guaranteed. As much as I’d love to see HHI and VB stay in the portfolio, I think they will disappear.

Any funds not spent in the capital reserves go back to owners when things end.

So they will have a set schedule for refurb and follow that and stay within the budget set up to pay for what needs to be done.

If the last refurb is done 7 years until the end, then the part of MFs that cover capital reserves will be reduced..I’d guess so that it’s down to zero before it ends

But, I think they will also need to be careful not to over improve either because owners could accuse them of renovating for future use.

It will be a balancing act.

 

[glamdring269]

I wonder how the next recession might impact this product. Rates are up, mortgages are as high as I can personally remember (and wouldn't surprise me if they go even higher. Does anyone know what % of direct and resale purchasers tend to finance? I have to imagine those numbers are going to go down at some point because the cost will be too great due to interest rate. Once that slows then prices will likely drop to some degree. This will be possible because by that point Disney will have stopped gobbling up points via ROFR because people aren't buying direct like they were over the last 1-2 years.

Anyway, I'm not an economist and could be completely missing something here. I don't know what the future holds on prices other than that there will be ups and downs and I personally think that we're about to hit a down period. The only question is how much of a down period (degree and length of time)

 

[ehh]

I wonder how the next recession might impact this product. Rates are up, mortgages are as high as I can personally remember (and wouldn't surprise me if they go even higher. Does anyone know what % of direct and resale purchasers tend to finance? I have to imagine those numbers are going to go down at some point because the cost will be too great due to interest rate. Once that slows then prices will likely drop to some degree. This will be possible because by that point Disney will have stopped gobbling up points via ROFR because people aren't buying direct like they were over the last 1-2 years.

Anyway, I'm not an economist and could be completely missing something here. I don't know what the future holds on prices other than that there will be ups and downs and I personally think that we're about to hit a down period. The only question is how much of a down period (degree and length of time)

DVC direct financing interest rates are unchanged compared to 2019--8.99% for 20% down + auto-pay + good standing.

 

[glamdring269]

DVC direct financing interest rates are unchanged compared to 2019--8.99% for 20% down + auto-pay + good standing.

Unchanged for now.

 

[Cfabar1]

How did 2008 crash impact DVC? Did points ever trend down? Did Disney do financing specials To entice buyers?

 

[Sandisw]

How did 2008 crash impact DVC? Did points ever trend down? Did Disney do financing specials To entice buyers?

Yes. I got BWV in 2012 for $53 and $55 a point. It was in the mid 70s when I began looking at DVC in 2009.

SSR was also in the 50s then and I remember a time when getting VB in the high $30s to low $40s was getting through.

So it took a few years, but deals were really good.

Market didn’t bounce back too quickly either for some products. I did get SSR in the low 70s in mid 2017 as well.

Since the average DVC price using DVCRM averages is down for many resorts this last year, I’d venture a guess we will see some trends to continue the next year or so..but ROFR can impact that for some of the resorts as well.

Back then, I don’t remember a ton of ROFR scribing like it is now. So things passed at great prices.

 

[sethschroeder]

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.

The total points in all of DVC did not go up 32% over 4 years. Also where are you getting 8% per year from?

Like what are you even talking about.

Take all the points and all the contacts. 1% of them go through the resale process every year. Some of those points/contracts are already resale as well.

There is 0% ability for that to be 8% per year. Its 1% per year.

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%.

Except they are not increasing 32% over the long term every single year..... Again what you are going on about?

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%.

Again except that is not the historical 20+ year math on this. Its 1% and there is not a massive multi-year backlog of contracts sitting on the market. Its simply that overtime on average 1% of contracts are exchanging hands on the secondary market.

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%.

No the total DVC points did not just go up 30% from those 4 resorts. Show the math please which you can not as you have no clue on the total points of Disney Tower or Poly 2 at this point so its impossible to show the math.

I will give you a head start there is roughly 79 million DVC points in existence today. Riviera makes up 8% of the total points and Grand Floridan build 2 makes up 2%.

When CCV was launched the total stood at 70 million so with Riviera and VGF both being added its an 11% jump over the past 5 years. No where near the 32% you are throwing around and just pulling out of thin air for resorts that don't actually exist yet.

 

[sethschroeder]

I’d imagine the final 5 years Disney could get quite stingy with what maintaining the property looks like, especially since for many of these properties a refurb or sale of the property is all but guaranteed.

They would need to return the MFs for upkeep then back to the owners or lower the cost of the MFs ahead of time to account for not doing the repairs.

Honestly its pointless for Disney to not keep the resorts up to a certain point. They don't want sky high MFs to scare people off but its not like Disney is pay for the upkeep themselves they are charging the members for it.

Some resorts have been passed over because they don't want to position a limited construction workforce there but it has nothing to do with money for the most part IMO.

People around here at times will say Disney can get away with anything but I think many of us have shown that we will not let that occur with DVC. There are rules they are guided by and although at times they will push the limit there is enough of that care that Disney then straightens back out to avoid any issues.

 

[havoc315]

The total points in all of DVC did not go up 32% over 4 years. Also where are you getting 8% per year from?

Like what are you even talking about.

Take all the points and all the contacts. 1% of them go through the resale process every year. Some of those points/contracts are already resale as well.

There is 0% ability for that to be 8% per year. Its 1% per year.

1% of 100,000= 1,000
1% of 108,000= 1,080
1080/1000=1.08, 8% increase


You seem to think that no matter what, re-sale can only increase by 1%.
If you went from 1 resort to 50 resorts, resale would only increase by 1%

Except they are not increasing 32% over the long term every single year..... Again what you are going on about?

32% over 4 years. Approximately 8% per year.

Again except that is not the historical 20+ year math on this. Its 1% and there is not a massive multi-year backlog of contracts sitting on the market.

Actually, there is a pretty big back log.

Tell me… what’s 1% of 220,000, and what’s 1% of 270,000?
And what’s the difference between 1% of 270,000 and 1% of 220,000?

Its simply that overtime on average 1% of contracts are exchanging hands on the secondary market.

So if you increase the number of contracts by 32%, then you increase the secondary market by 32%. This is like middle school math.
Yes — it’s still 1% of all contracts. But if the number of contracts grows by 32%, then the number of resales grows by 32%.

No the total DVC points did not just go up 30% from those 4 resorts. Show the math please which you can not as you have no clue on the total points of Disney Tower or Poly 2 at this point so its impossible to show the math.

As of 2020, there were 220,000 contracts, roughly. https://en.m.wikipedia.org/wiki/Disney_Vacation_Club#:~:text=It allows buying a real,an estimated 220,000 club members.

Riviera has about 6 million points.
VGF expansion- I believe it’s 1.7 million.
Poly 2 is 2/3rds the size of RIV, roughly 4 million points.
VDH, I’ll estimate at 4 million.

That’s roughly an addition 16 million points.

At an average contract of 200 points…
That’s 80,000 new contracts as those 4 resorts sell out.

So go from 220,000 contracts to 300,000…
That’s actually a 36% increase.

I will give you a head start there is roughly 79 million DVC points in existence today. Riviera makes up 8% of the total points and Grand Floridan build 2 makes up 2%.

When CCV was launched the total stood at 70 million so with Riviera and VGF both being added its an 11% jump over the past 5 years. No where near the 32% you are throwing around and just pulling out of thin air for resorts that don't actually exist yet.

You seem to have forgotten VDH and Poly2.
As I have said repeatedly — the 4 year stretch from 2020 to 2024.
So even by your estimates — 70 million to 86 million.. it’s 23%.

By my math above, it’s over 30%.

But we aren’t that far off from each other.. you’re at 23%, I’m at 32% over a 4-5 year stretch.

 

[glamdring269]

Yes. I got BWV in 2012 for $53 and $55 a point. It was in the mid 70s when I began looking at DVC in 2009.

That's fantastic. We didn't get in until 2012 but did snag a BRV small point contract for ~$73/pt if I remember correctly.

 

[Sandisw]

The total points in all of DVC did not go up 32% over 4 years. Also where are you getting 8% per year from?

Like what are you even talking about.

Take all the points and all the contacts. 1% of them go through the resale process every year. Some of those points/contracts are already resale as well.

There is 0% ability for that to be 8% per year. Its 1% per year.



Except they are not increasing 32% over the long term every single year..... Again what you are going on about?


Again except that is not the historical 20+ year math on this. Its 1% and there is not a massive multi-year backlog of contracts sitting on the market. Its simply that overtime on average 1% of contracts are exchanging hands on the secondary market.



No the total DVC points did not just go up 30% from those 4 resorts. Show the math please which you can not as you have no clue on the total points of Disney Tower or Poly 2 at this point so its impossible to show the math.

I will give you a head start there is roughly 79 million DVC points in existence today. Riviera makes up 8% of the total points and Grand Floridan build 2 makes up 2%.

When CCV was launched the total stood at 70 million so with Riviera and VGF both being added its an 11% jump over the past 5 years. No where near the 32% you are throwing around and just pulling out of thin air for resorts that don't actually exist yet.

I thought that 1% figure was attached to to the number of points that go from direct status to resale status each year

That is different than the number of contracts being sold on the market at any given time, isn’t it?

So you can keep it 1% for direct to resale..but see a larger increase in resale contracts being sold to potentially saturate the market.

 

[havoc315]

I thought that 1% figure was attached to the number to the number of points that go from direct status to resale status each year

That is different than the number of contracts being sold on the market at any given time, isn’t it?

Correct... Seth is apparently confusing 2 different things.
I'm fully accepting his number of 1% of contracts go up on the re-sale market in any given year, on average. (I suspect it's not quite so constant, but I'll accept that number for the sake of argument.)
Sources I've seen vary slightly, but there were reportedly 220,000 contracts in 2020. So using his numbers, that would be 2200 contracts per year, going on the re-sale market.
So if you add another 70,0000 contracts (quite feasible with RIV, Poly2, VDH and VGF2), and then you're up to 290,000 contracts and 2900 contracts per year. Still 1% of all contracts -- but 32% more than pre-RIV/Poly2/VDH/VGF2.

Now, DVC has grown quickly before. Obviously, when they went from 1 resort to 2 resorts, 2 resorts to 3 resorts -- Those were huge percentage increases. But at some point, the market can no longer absorb some large growth.

Look at it this way, when was the last time Disney built a deluxe resort hotel?
Animal Kingdom Lodge in 2021 -- NO new deluxe hotels in 21 years. In fact, over the last 21 years, Disney has REDUCED the number of deluxe hotel rooms -- They tore down a Contemporary Garden building, they converted half of Wilderness Lodge to DVC, converted some of Poly to DVC, currently converting Grand Floridian to DVC..

Thus, Disney recognized that the market for deluxe cash rooms was saturated -- they have even reduced the number of deluxe rooms. Eventually, DVC hits the same saturation. Are we there yet? I don't know. But eventually the demand softens.

 

[Ruttangel]

Ok, this might be another thread but where would you say resale prices would sit without ROFR? I know this kind of happened in pandemic for a few months but what about now? Would you still be happy with these prices if it happened in 2023?

My guesses for WDW resorts
VGF $140
RIV $120
OKW $90
SSR $100
OKWE/AKV $110
BRV $90
PVB $140
CCV $140
BWV $110
BCV $130
BLT $140

 

[kanerf]

BRV is probably going to jump up when the ongoing refurb gets done.

 

[Nursemanit]

Correct... Seth is apparently confusing 2 different things.
I'm fully accepting his number of 1% of contracts go up on the re-sale market in any given year, on average. (I suspect it's not quite so constant, but I'll accept that number for the sake of argument.)
Sources I've seen vary slightly, but there were reportedly 220,000 contracts in 2020. So using his numbers, that would be 2200 contracts per year, going on the re-sale market.
So if you add another 70,0000 contracts (quite feasible with RIV, Poly2, VDH and VGF2), and then you're up to 290,000 contracts and 2900 contracts per year. Still 1% of all contracts -- but 32% more than pre-RIV/Poly2/VDH/VGF2.

Now, DVC has grown quickly before. Obviously, when they went from 1 resort to 2 resorts, 2 resorts to 3 resorts -- Those were huge percentage increases. But at some point, the market can no longer absorb some large growth.

Look at it this way, when was the last time Disney built a deluxe resort hotel?
Animal Kingdom Lodge in 2021 -- NO new deluxe hotels in 21 years. In fact, over the last 21 years, Disney has REDUCED the number of deluxe hotel rooms -- They tore down a Contemporary Garden building, they converted half of Wilderness Lodge to DVC, converted some of Poly to DVC, currently converting Grand Floridian to DVC..

Thus, Disney recognized that the market for deluxe cash rooms was saturated -- they have even reduced the number of deluxe rooms. Eventually, DVC hits the same saturation. Are we there yet? I don't know. But eventually the demand softens.

I would argue that Disney has raised prices of their hotel rooms at a rate much higher than others - so they created this situation. This is evident by tracking Swan and Dolphin prices over time vs. BWI.

I personally can not see why anyone would pay for one week at BWI ( Feb 4 -11) $4465. Vs $3015 for Swan for a 2/queen base room. There is nothing to warrant a 30% premium

 

[Nursemanit]

Ok, this might be another thread but where would you say resale prices would sit without ROFR? I know this kind of happened in pandemic for a few months but what about now? Would you still be happy with these prices if it happened in 2023?

My guesses for WDW resorts
VGF $140
RIV $120
OKW $90
SSR $100
OKWE/AKV $110
BRV $90
PVB $140
CCV $140
BWV $110
BCV $130
BLT $140

PVB / VGF/ RIV have not been taken in Rofr so they would not go down. In fact most of the 2042 resorts have not had any significant ROFR activity in the past 6 months ( OkW is an exception)

So your numbers are way off.

 

[RoseGold]

Thus, Disney recognized that the market for deluxe cash rooms was saturated -- they have even reduced the number of deluxe rooms. Eventually, DVC hits the same saturation. Are we there yet? I don't know. But eventually the demand softens.

No, Disney decided not to compete in that market. Waldorf, Four Seasons, Ritz came in hot and ancient GF couldn't keep up with that kind of luxury offering.

With the notable exception of the Starcruiser, Disney didn't even try for the high end market. They just increased the prices on the same old buildings and threw Moana around a little and reassigned some rooms so we would pay for an old building refurb.

I think it's possible they could, like in the spot between GF and MK or the Epcot-adjacent hotel that was scrapped in Covid. There's no indication they are doing that now.

 

[Ruttangel]

PVB / VGF/ RIV have not been taken in Rofr so they would not go down. In fact most of the 2042 resorts have not had any significant ROFR activity in the past 6 months ( OkW is an exception)

So your numbers are way off.

PVB/VGF and RIV would suffer a drag effect of the others being reduced....by having any sort of ROFR, ie SSR at $130 it sets the bar for everything else.
Makes sense to me