Resale Market in 10 Years - Little Ole Lady Planning

[DVCERSINCEDAY1]

I'm buying some contracts on the resale market currently. I'm 59 and may want to sell these in 12 years or so. So, assuming I sell in 2020, can I expect to get back my original investment then... considering inflation and the declining years remaining on the contracts (expire 2042). For, example, if I pay $80/point today, can I expect at least $80/point when I resell in 2020?

I think so. What do you think?

 

[backyardponder]

This is probably one of the tougher questions on the board. Like any real estate transaction, there is always risk. You just can't predict this. We bought via resale recently. My budgeting treated the initial purchase as throw away money (expensive throw away money). If, at some time in the future I want to sell, anything I get will be a bonus!

Also, remember that the value of money typically goes down. $80 today will probably not be worth $80 in 12 years.

 

[DVCERSINCEDAY1]

Oh yes, certainly I realize that $80 in 2020 will be probably about $40 today...but I'm planning on getting back that $80 in 2020. I do not think of this investment as throw-away...that is a totally worst-case scenario.

 

[kawanku]

I don't think we can predict the pricing for that far - however, I think you can't treat this as investment at all. This DVC is for you to prepay your future vacation. If you intend this as an investment, you will be disappointed. I am not saying you can't make money on it or it is not worthed - just want to give you a reality.

 

[DVCERSINCEDAY1]

I do not see planning to get back what I pay today in about 10 years is that unrealistic. Nor do I see it as an attempt to make money. I know that I will lose the interest on the investment over this time, I also know that I have to pay maintenance fees over this time. But I also feel that a contract with 22 years remaining will have considerable monetary value in 2020...I believe a very reasonable estimate is that it will be worth the same dollar amount then, albeit those dollars will be worth much less.

I did this with OKW points bought in 1993, sold them in 2003 for just a bit more than what I paid for them in terms of point price. I lost the interest, had to pay the maintenance, but got back my original investment after 10 years.

 

[bookwormde]

In “real” dollars I would expect that you would get about 60% of your investment back. But in inflated $ you should get close to what you paid less the sales commission (around 10%)

bookwormde

 

[drusba]

Over the last 10 years or so, the resale market for DVC has been fairly good, prices have generally risen -- not by huge amounts but up, which for timeshares is a lot better than you should expect because many decline in price. The factors that have caused that have included that Disney remains a highlight attraction, demand has remained good, and the onset of internet sale sites which made it a lot easier to find a buyer than the old hire an agent, put some adds in a newspaper, and hope method. Nevertheless, that market has been supported by Disney, mainly by opening new DVC sites which invariably have higher prices than the old ones did and thus causing many to look for the bargain in the resale. It has also done so by exercising right of first refusal when it believes price is too low. Also important is that market existed during a time when you still had a lot of years to go to end date.

WDW will likely remain a high attraction over the next 12 years. However, you cannot assume Disney will still be building more DVC sites or still supporting resale price although it is a possiblity. In any event, the biggest thing that will definitely change for sites with a 2042 end date is that you will be much closer to that end date, and buying to get only 22 years in 2020 is undoubtedly something that will not be that attractive to a huge class of buyers, e.g., anyone under 40, particularly if Disney is selling sites by that time which may have end dates close to 2070. That factor definitely makes it uncertain as to whether you will be able to recover your investment even if all you want to recover is $80 in today's dollars. Personally, if my thought was that I will likely have to sell in 12 years but still wanted to buy, I would place my bet on AKV as the one that might give a return on my investment because it has a 2057 end date.

 

[DVCERSINCEDAY1]

I find this all very interesting. Let me put a question to you: If you could buy at this moment a contract for 22 years at $40/point, would you. I would jump all over that. That's roughly the same that $80/point will be in 2020 for 22 years.

Talking in current dollars, I believe that the $60/price in 12 years on an $80/price today is the probably the best (yet a realistic expectation) estimate. I believe that a $0/price has a zero probility (throw-away investment). I believe that the $40/price (my guestimate) is conservative.

Translated, $80/today, mostly likely to be $120/12 years, totally unlikely to be $0/12 years, conervatively likely to be $80/12 years...that is I can feel fairly confident in getting my original investment back in 2020.

 

[WALTSAGOD]

What your return on buying DVC would/may be in the future would not ever enter enter my mind.

 

[CarolA]

I'm buying some contracts on the resale market currently. I'm 59 and may want to sell these in 12 years or so. So, assuming I sell in 2020, can I expect to get back my original investment then... considering inflation and the declining years remaining on the contracts (expire 2042). For, example, if I pay $80/point today, can I expect at least $80/point when I resell in 2020?

I think so. What do you think?

I bought mine with the theory that when I sold them they would be worthless.

I think that's the best way to do it! by 2020 the original use year contracts will only have about 20 years remaining. I don't think they are going to sell for much considering I expect Disney to still have new things on the market with longer terms.

 

[DVCERSINCEDAY1]

I have to think about what these contracts might sell for in 2020. I will be 71at that time, with no children, and I may very well need this money then. It is a luxury I cannot afford to ignore this issue.

 

[lowepg]

I have to think about what these contracts might sell for in 2020. I will be 71at that time, with no children, and I may very well need this money then. It is a luxury I cannot afford to ignore this issue.

Might be less risky to just rent points for the next 12 seasons then.... leave your money in the bank and keep compounding interest...

 

[WALTSAGOD]

Maybe think about it in terms of what you will pay, vs how long it will be until you vacation on points to break even.

Maybe DVC isn't for someone who will only use it for 12 years.

 

[crisi]

Don't buy if you NEED the salvage value.

If gas prices continue to increase, the floor will drop on DVC resales. Fuel costs need to stablize - and that is unlikely to happen until the cost of alternative fuels equals the cost of gas. I think we are in for some major bumps before that happens.

 

[mrdiscranky]

For, example, if I pay $80/point today, can I expect at least $80/point when I resell in 2020?

I wouldn't expect anything close to that, especially for a 2042 resort.

Which isn't to say you won't get it. You might. But I wouldn't plan on it. And if you need to get back that much to justify your purchase, I wouldn't buy.

For planning, I'm assuming that contracts will be worth $0 in their final year, and will decrease linearly until then. If there are 40 years left, I'd figure they'll sell in 10 years for 75% of their current value. It's not a great model - but probably a safe one for planning.

 

[Judy WI]

As others have said you may just want to rent points. That is a pretty good deal in its self.

I would say DO NOT tie up money you think you are going to need later.

 

[doubletrouble_vb]

Renting and waiting for a slower buyer's market might be the better way to go. People who were dependent on the airlines to get them to WDW may be quite vulnerable to not being able to go unless they can budget the time in to make the drive (that mass of owners up in the NY-Tristate area for example).
People like that may be selling or holding on and renting out their excess points.

I'd suspect over the next year or so Disney may be putting a few accomodation deals of their own out there as well. Notice how many destinations have advertisements on TV? Makes you wonder if the slowdown has already started. I've also seen lots more kids on the streets of downtown Atlanta today than I did last summer. Seems like Mom & Dad may be staying in the area for the fourth of July instead of going away.

 

[Disney_Villain]

For, example, if I pay $80/point today, can I expect at least $80/point when I resell in 2020?

That is SO hard to say! What value will our DVC contracts have in X years?

Rather than even go that direction, try thinking along this line:

DVC takes about 7 years of vacationing to recoup your initial investment. You'd be getting about 5 years of subsidized vacations after that - not factoring any interest on possible loan payments either - and you may still have a lot of value left in your contract(s) when you sell.

 

[DVCERSINCEDAY1]

ok - so assume $80/point today with 33 years left, sell in 2020 with 21 years left, a linear model, same rate of delince each year, 2.42/point per year, then 12x2.42 = $29/point decline or 80-29 = $51/point market value in 2008 dollars.

now, consider inflation's effect on the value of money, looking historically, it is reasonable to assume that money looses around 1/2 it's value each 10 years. so consider that 12 years from now, a conservative estimate of 51/point in 2008 dollars is around $100/point in 2020. again, this model suggests that I'll get back my original investment and then some.

it is too depressing to suggest that dvc isn't for me at 59 when as my name indicates, i've been an owner most of the years since 1993. and it is overly pessimistic to think that I won't get back my original investment, albeit, i loose the interest and the money will be worth only about 1/2 as much.

 

[lowepg]

it is overly pessimistic to think that I won't get back my original investment, albeit, i loose the interest and the money will be worth only about 1/2 as much.

To the OP:

I had to smile reading through all this. You asked people's opinion, then proceeded to refute any posts that differed from what you wanted to hear!

I'm sure I do the same thing from time to time on discussion boards- but it's more fun to point out someone else doing it