Rental prices dropping will drive resale prices lower

[Noah_t]

Watching the rental thread closely there has definitely been a steady decline in prices. What follows is one persons completely unsolicited advice.
Declining DVC rental prices will directly effect resale prices. Once the price per point drops below a certain threshold a lot of rental contracts will get put on the market and inventory will go up. We will also see rental prices drop more as point inventories go up since people have not been able to use them. All signs point to DVC prices will continue to drop. The only question prospective buyers should be asking is when the decline will stop. Unless money is no issue then common sense would say to wait until at least maintenance fee season to see where prices end up.

 

[DebbieB]

Watching the rental thread closely there has definitely been a steady decline in prices. What follows is one persons completely unsolicited advice.
Declining DVC rental prices will directly effect resale prices. Once the price per point drops below a certain threshold a lot of rental contracts will get put on the market and inventory will go up. We will also see rental prices drop more as point inventories go up since people have not been able to use them. All signs point to DVC prices will continue to drop. The only question prospective buyers should be asking is when the decline will stop. Unless money is no issue then common sense would say to wait until at least maintenance fee season to see where prices end up.

There are so many confirmed reservations out there. One well known site had 1300 reservations last time I checked.

I bought a VGC resale last January, at first I was kicking myself thinking I should have waited (who would have known). I'm surprised from the listings I've seen, it hasn't dropped. I paid $180 with 1 point for this year (sellers pay dues), I saw a stripped this week for $214! I know VGC is extremely limited so perhaps not a good example.

 

[starry_solo]

I think they have to drop their prices before they will sell.

 

[zakdavid]

I think they have to drop their prices before they will sell.

There was a 200 point september UY contract this week at VGC for 210 a point I think. Sold within 15 minutes. Not sure what the offer was, but the fact that it sold so far makes me think it was at asking

 

[JoshF]

I think resale is still a good value. It may drop a little but if you buy resale after doing research here I don't think you will get killed if you need to sell. Certainly nowhere near if you bought retail.

 

[pinkxray]

I am almost a new member. Have my first contract at ROFR now. I tend to go to Disney every other year. I was first looking at 150/160pt contracts and planned to rent out whatever I don’t use.
Once Covid hit I put the brakes on a larger contract and got 100pt instead. I will hopefully add on another 50-100 pts but will wait until all this plays out.

 

[Kylie_1504]

I am looking at buying my first contract. I know nothing is getting taken by ROFR Currently which is enticing to buy now, however the perfect contract hasn’t come up. With the predictions that prices will continue to come down how do you think that will affect ROFR starting up again?

 

[starry_solo]

There was a 200 point september UY contract this week at VGC for 210 a point I think. Sold within 15 minutes. Not sure what the offer was, but the fact that it sold so far makes me think it was at asking

Lol. I meant the rental reservations. Another poster mentioned 1300 of then for rent

 

[bookwormde]

I am looking at buying my first contract. I know nothing is getting taken by ROFR Currently which is enticing to buy now, however the perfect contract hasn’t come up. With the predictions that prices will continue to come down how do you think that will affect ROFR starting up again?

How much ROFR primarily driven by direct sales demand for sold out resorts. Given the strong discounting for new resorts and very limited for sold out resorts, I am guessing that it will remain quite limited. it is also important to remember that they will likely be looking for specific UYs and ones that can reasonably be broken down into the point quantities that are needed

 

[CraigInPA]

In order for people holding contracts that are used primarily for rental to be incentivized to sell, the rental prices would have to drop to a level where the maintenance fees and the apportioned cost of the contract are above the rental price, and not expected to recover for some period of time. For example, if you are an owner holding a $7.50 maintenance fee resort and your incremental cost, including time cost of money, is an additional $3.50 per point, rental prices would have to drop to under $11 per point for break even. Assuming a profit needs to be made, let's add another $2 to that, meaning the rental price would have to fall to below $13 for the owner to not turn a profit.

Today, there are a lot of existing reservations being offered for rental because many of those are held by renters, not owners, who know they will get nothing if they cancel. Those held by owners are likely due to potential point loss. These are all distressed points in danger of being lost, and prices reflect that.

Extrapolating a significant drop in price in DVC resale due to the huge number of reservations for rent in the current pandemic environment is a logical error. The real metric is the price per point for future rentals. I don't see that price changing at present.

 

[wreing]

There was a 200 point september UY contract this week at VGC for 210 a point I think. Sold within 15 minutes. Not sure what the offer was, but the fact that it sold so far makes me think it was at asking

In the short time I've been watching it seem like VGC is kind of its own thing. Similar to California real estate, it might not follow the trends of the rest of the country.

 

[sethschroeder]

Rentals will easily bounce back in the next 2 years. In the meantime you can still get a pretty good rental price simply because how much cheaper it is than Disney hotels.

 

[Deb & Bill]

Rentals will easily bounce back in the next 2 years. In the meantime you can still get a pretty good rental price simply because how much cheaper it is than Disney hotels.

Once this mess is over, Disney will discount their hotel costs. It will be cheaper to rent direct from Disney than to try to go through a broker. It will lead to a lot of people renting their own points instead of paying a broker a steep cost.

 

[Noah_t]

Rentals will easily bounce back in the next 2 years.

I like your optimism!

 

[Noah_t]

meaning the rental price would have to fall to below $13 for the owner to not turn a profit.

Theres a lot of people renting at 14$ so we are getting close.

 

[CastAStone]

There are so many confirmed reservations out there. One well known site had 1300 reservations last time I checked.

I bought a VGC resale last January, at first I was kicking myself thinking I should have waited (who would have known). I'm surprised from the listings I've seen, it hasn't dropped. I paid $180 with 1 point for this year (sellers pay dues), I saw a stripped this week for $214! I know VGC is extremely limited so perhaps not a good example.

VGC will never meaningfully drop, at least not before Disneyland DVC opens, and should be exempt from the larger DVC price conversation.

 

[CastAStone]

How much ROFR primarily driven by direct sales demand for sold out resorts. Given the strong discounting for new resorts and very limited for sold out resorts, I am guessing that it will remain quite limited. it is also important to remember that they will likely be looking for specific UYs and ones that can reasonably be broken down into the point quantities that are needed

Looking at the OC deed records, I saw new direct contracts built out of as many as three other contracts. You own 0.06% of this room in this building and 0.04% of that room in that building etc. I think they may have given up on the “reasonably broken down” piece of it.

 

[CmdrThor]

I think the lack of ability to buy 2020 tickets right now is one of the major factors driving rental prices down. Demand is just way down right now. We have a trip coming up in September and I could now to switch to most resorts in a 2BR which is unheard of less than 3 months out.

Once ticket sales resume and we get closer to 2021 I think rental prices will pop back up. I also don't think Disney will be offering discounts to fill rooms. They would probably rather keep more resorts closed and charge rack rates for the next 6-12 months.

 

[bookwormde]

Looking at the OC deed records, I saw new direct contracts built out of as many as three other contracts. You own 0.06% of this room in this building and 0.04% of that room in that building etc. I think they may have given up on the “reasonably broken down” piece of it.

That is interesting, it essentially aggregates 2 deeds. I think DVD would not say so but I think an owner could have a good legal position to be able to split it later

 

[sethschroeder]

Theres a lot of people renting at 14$ so we are getting close.

And Disney has been shut for 4 months? No one could buy tickets until today which is only 2021, there is a ton of uncertainty on travel the next 12-18 months, and most people are not traveling at all.

All of that and it's still $14.

As soon as there is certainty that people can travel, we will have a vaccine, and people can easily buy tickets (and guarantee entrance to the parks) you will see the numbers bounce back up.

People will always look for cheaper options and that is a DVC rental even more so now. The lower the rental price the more people will take on risk (or be able to get a cancel for any reason insurance) on renting DVC.