Question about buying resale at different resorts

[deanna85]

I am looking into buying resale and have noticed that the price per point at Boardwalk is not too much cheaper than at Animal Kingdom. I would think it would be much less, because the contract expires in 2042, compared to animal kingdom, which expires in 2057. Can someone help me understand why?

 

[CarolMN]

Supply and demand - probably due mostly to its location.

From the BWV, you can walk to two of the four major theme parks. That's considered a huge advantage by many during Epcot's Food & Wine Festival as well as the Flower & Garden Festival and during the Holiday Season (Candlelight Processional & Holidays Around the World at EPCOT and the Osborne Lights at DHS)..

 

[icydog]

Both the BWV and the BCV have this in common. There are many more people who want those two resorts than the all the others. I own at AKV and have no problems with the discrepancy. As the properties age they will fall into line more proportionately. I expect that the BLT (I own there too as well as the AKV, BCV, OKW and VB) will become the most popular resort. Location, location, location.. I think the proximity to the Magic Kingdom will be a big draw and the ability to get to Epcot on the Monorail is also a big plus. I wouldn't buy the BWV, I sold my 290 point contract there, because I don't feel it is being kept up like the other resorts. I think if I had to pick a property to buy resale it would be Villas at Wilderness Lodge or the Beach Club Villas. But right now, with the great DVC incentives, it doesn't make sense to buy anything resale.

 

[CMOORE185]

But right now, with the great DVC incentives, it doesn't make sense to buy anything resale.

I disagree with this statement. Even with incentives BLT costs $98 pp. People are buying SSR as low as $64 pp, averaging about $68 pp. I'd say $30 pp savings makes sense to me. And these prices include contracts that have all 08 points banked and all 09 points. And before anyone says anything about closing costs, alot of sellers are having to pay these.

 

[Dean]

I disagree with this statement. Even with incentives BLT costs $98 pp. People are buying SSR as low as $64 pp, averaging about $68 pp. I'd say $30 pp savings makes sense to me. And these prices include contracts that have all 08 points banked and all 09 points. And before anyone says anything about closing costs, alot of sellers are having to pay these.

It depends on how many points, home resort and how you will use it. For 50 points or so, it makes no difference. For OKW, SSR, HH or VB it certainly is best resale for moderate to larger contracts.

 

[ammo]

I am looking into buying resale and have noticed that the price per point at Boardwalk is not too much cheaper than at Animal Kingdom. I would think it would be much less, because the contract expires in 2042, compared to animal kingdom, which expires in 2057. Can someone help me understand why?

As pointed out by others, there are countless factors that affect the prices for individual resorts. So let me add another BWV observation and then a general 2042 vs. 2057 observation.

Like AKV, BWV has multiple views, including the standard view which costs fewer points than preferred/BW views. This makes vacations less costly, and it can be difficult to get standard rooms unless you have the home-resort booking priority at BWV. So this plays some role in demand.

And the extra 15 years (years 2043 through 2057) are not priced as highly at this time as earlier contract years, for a couple of reasons. One is the time value of money, a basic financial concept. You are paying a purchase price today for points that you won't be able to use until the future -- the further into the future you go, the less money you should be willing to pay today for a particular year of points.

Another issue is uncertainty about making financial commitments so far into the future. Being a DVC owner requires pretty substantial annual maintenance fees, which increase pretty much every year. I really have no idea what my life or my travel habits will be like 40 years from now, so I am not very keen on paying today for something so distant in the future.

So I prefer shorter contracts rather than longer ones (if I bought OKW right now, I would buy a 2042 contract rather than 2057). People have mixed views on this topic, but a portion of buyers think like me, which helps maintain demand at resorts with 2042 contracts.

 

[ammo]

To follow up on the concept of the time value of money, here is a simple thought experiment.

Imagine you owe a friend $1,000 per year for the next 20 years. By the time the twenty years is up, you will have paid out $20,000.

But what if your friend wants you to pay off your debt today -- should you give him a check for $20,000? Of course not. Because of inflation (and other issues), $1,000 today is worth more than $1,000 will be worth a year from now. And it is worth a lot more than $1,000 will be worth in 20 years.

So if you paid your friend today, you might give him $1,000 for this year's payment, but you would decrease the value of each subsequent payment that gets accelerated into the current year. The further out into the future you go, the less money you are willing to pay today. This is called discounting. If you ever bought a US savings bond for $86 that pays off $100 five years later, you saw this concept in action.

In the case of 2057 contracts, those extra 15 years are way out there -- some years are 45, 46, 47, 48 years in the future. You are paying for those points today, so you are not willing to pay as much for 2055 points (for example) as you would pay for 2012 points. It's not just a financial concept, it's also common sense.

That helps explain why the premium for 2057 contracts isn't as great as many people expect. You can see this reflected in the prices for OKW resales, since 2042 and 2057 contracts are selling concurrently.

 

[CMOORE185]

It depends on how many points, home resort and how you will use it. For 50 points or so, it makes no difference. For OKW, SSR, HH or VB it certainly is best resale for moderate to larger contracts.

How can you say a 50 point contract makes no difference, you are saving $1500. Even if you pay closing costs it is worth it.