Well, I don't know that demand exceeds supply---there is still *plenty* of conventional-booking availability for the week we are going (one after President's Week), and we're now just one month out. On expedia alone I can book Summer Bay, Westgate Lakes, WVV, Oak Plantation, Parkway International (II), Liki Tiki (II), Celebrity Resort (II), Vistana, Marriott Grand Vista/Royal Palms/Sabal Palms/Cypress Harbor (II?), Westgate Blue Tree, Westgate Town Center, Orbit One, and Westgate Towers. None of them are fire sale prices, (and many are high, though no where near the rates of equivalent onsite lodging) but they are by no means sold out.
Even during P-Week there is availability in at least a dozen of those resorts. Granted, the price is a bit higher, but still---there's room if you need it.
On the other hand, these resorts no longer appear to be panic selling. It looks to me as though they are trying to keep a floor on rental prices, possibly to preserve owner value. After all, if an owner decides that (a) it costs more in annual maintenance than it would to just rent a unit, and (b) the rental prices are so low that the resale value on the week goes down the drain, then that owner might decide to just default on the payments and relinquish the week. And that's one thing that the timeshare resorts CANNOT allow to happen in any significant numbers.
As to whether Orlando is overbuilt or not, I don't know. It does seem that few resorts other than DVC seem to hold their resale value, and the maintenance fees on the resorts I've looked into are still high. We're renting a 3BR/3BA townhome with a private pool for less than what the annual maintenance on a comparable week would be at nearly every resort I've looked into so far, let alone exchange memberships, exchange fees, etc. etc. etc.
