Resale Market Outlook

[GrumpyInPhilly]

Those were to good old days if you were in the market for buying points. We bought all our points between 2010 and 2012. At that time including closing cost, any MF due and with renting any current points on the contracts, our average cost worked out to be around $33/point. Wish I had bought more points back then

Didn't you also get a great deal in 2014? I seem to recall you passing ROFR on a fully loaded OKW contract for $60. If so, some deals were still to be had at that late date.

 

[DougEMG]

Didn't you also get a great deal in 2014? I seem to recall you passing ROFR on a fully loaded OKW contract for $60. If so, some deals were still to be had at that late date.

Okay, you have a really good memory. I did buy an 310 point OKW contract in Jun 2014 for $60/point, no MF, paid closing and it came with 620 current points which I rented out right away. So I valued that one at $36.55 a point. Never did come across any other deals as prices started rising and then I pretty much stopped looking because of the increase in prices.

The best deal I ever had though was on a 200 point SSR for $50, no MF due, paid closing and it had 598 points on it.

 

[Brian Noble]

Disney will exercise ROFR if prices come down.

Maybe, but they didn't during the last DVC resale price slump. ROFR basically dried up.

 

[Dean]

Maybe, but they didn't during the last DVC resale price slump. ROFR basically dried up.

They pretty much didn't ROFR anything during the last downturn IIRC. Timeshares tend not to carry significant cash on hand, even new builds are often built in phases with cash flow from one phase to the next.

 

[Brian Noble]

...and realistically, they shouldn't ROFR anything unless they have a buyer for the contract on the line. Industry standard is that the cost of new construction should be no more than 20% of sales price. So, unless resale prices drop below 20% of developer prices, it's cheaper to keep building new than buying back old.

 

[DVC Doctor]

People seem to forget how tough it was to access cash in 2008-2010 and Disney chose not to use their cash on ROFR as so many people were defaulting on their loans, they were probably getting hundreds of contracts for free from loan defaults. Many people thought we were heading into a depression.

 

[Dean]

...and realistically, they shouldn't ROFR anything unless they have a buyer for the contract on the line. Industry standard is that the cost of new construction should be no more than 20% of sales price. So, unless resale prices drop below 20% of developer prices, it's cheaper to keep building new than buying back old.

There are other savings besides simply construction for existing resorts but I agree with you're point that the price has to be significantly lower than the sale price for it to make sense from a resale standpoint alone. However, there are other reasons to ROFR and reselling those points is actually not the main one for DVC, creating a floor and uncertainty for resale is actually their main goal. Obviously they don't want to end up with a boatload of points they're stuck with in doing so though. DVC has proven they can sell products that would otherwise be difficult to sell, as an example they sold SSR the first time with that bunch of points and relatively lower demand and continued to raise prices beyond what most of us would have thought would have been feasible. So if they did end up with a bunch of points for an existing resort, they could always have a special or even reopen active sales there. And they've done all of this with an extremely inefficient and passive system in terms of sitting back and hoping buyers came to them.

 

[Brian Noble]

as an example they sold SSR the first time with that bunch of points and relatively lower demand and continued to raise prices beyond what most of us would have thought would have been feasible

The fact that e.g. Wyndham can sell contracts for $180-$220/K is evidence enough that you can sell any timeshare to anyone, though without the extreme passivity that characterizes DVC.

 

[Dean]

The fact that e.g. Wyndham can sell contracts for $180-$220/K is evidence enough that you can sell any timeshare to anyone, though without the extreme passivity that characterizes DVC.

No doubt, Wyndham isn't the only example. My point was they did so at the high prices missing out on roughly 98% of the prospects that Marriott, Wyndham, Bluegreen, etc would have pulled from and with a low key approach that likely missed 90% or more of the potential sales for those that did tour.

 

[Dtw002]

$180,000 to $220,000. Is that right? If so THAT IS CRAZY.

 

[Brian Noble]

No. Wyndham sells points by the thousand. Bonnet Creek, one of the better non-DVC resorts in Orlando, costs 224K points in prime season for a full week in a 2BR. A studio in Midtown Manhattan is 350K/week, while a summer week in a 2BR in the Smoky Mountains is only 166K/week. You can book partial weeks, etc. though with some restrictions in prime seasons.

The "list price" these days is about $220 per thousand points, but you can negotiate that down to about $180 at most locations. So, someone buying enough points from Wyndham to spend a week at Bonnet Creek every other year (112K annual) is going to spend at least $20,000.

 

[DVCcurious]

$180,000 to $220,000. Is that right? If so THAT IS CRAZY.

You have misunderstood. It's not $180 thousand, is $180 PER thousand, or .18 per point. But the point usage requirement is all in thousands so that's why it was listed per thousand. It could also have been written $180-$220 per point with 224 points required for Bonnet Creek.

So if you want a week per year at Bonnet Creek you'd be looking at $45,000 for the points necessary.

And if you decide you don't like it you can sell your points on EBAY for $1!

 

[supersnoop]

And if you decide you don't like it you can sell your points on EBAY for $1!

Bonnet Creek was going for about $1,300 on eBay for that many points the last time I was in the market.

 

[Dean]

And if you decide you don't like it you can sell your points on EBAY for $1!

As noted, it's not quite that bad but pretty close retail to resale. The trick is to buy the resale and avoid the large upfront outlay.

 

[longboard55]

Here is my analysis of all things American. Facebook has changed us. We were once a consumer economy. We are now an experience economy. In the old days if someone had a few extra dollars they would buy a designer purse. Now they spend a weekend in las vegas and post the pictures on facebook. The internet has opened up the world, its all about selfies and shared experiences.

I live on the left coast. Ten years ago no one would ever think of going to WDW. Now we go and my daughter instgrams back a couple hundered photos and her friends are amazed. TripAdvisor has opened up the world, you now know where to stay, what to do, how much money to bring, all the best places.

So where are we at, people have information they never had before. Now they know Disneyworld is not just another theme park. They know renting points is cheaper than a room. They know staying on WDW property is essential.

People stopped shopping at nordstroms and put that money in vacations. I own Hawaiian Airlines stock, 4 years ago is was $5 a share, now its $58. Meanwhile macys is going down the tubes and closing stores.

Everyone loves Disney, and its a very safe place to go. Why do you think Disney bought two more cruise ships, they see the demand. So bottom line, hang on to your DVC you will not regret it.

 

[DVCcurious]

Facebook has changed us.

It's certainly changed me!

Before I joined Facebook in 2008 I looked like this:




But after 8 years on Facebook I look like this!

 

[Brian Noble]

We were once a consumer economy. We are now an experience economy.

I'm not sure social media has driven it, but there's a lot to be said for experiences over things.
http://www.theatlantic.com/business/archive/2014/10/buy-experiences/381132/

 

[mustinjourney]

The only way to come out ahead by waiting, in my opinion, is to wait for a loaded contract to come along.

That's probably the truest statement.

 

[mustinjourney]

Interesting. Why? These seem like no-brainers to me---as long as you pay off before the horizon limit.

On a similar note: I was prepared to buy my most recent car with cash, but got an extra $1.5K incentive for "financing" the purchase. I financed the minimum amount possible, and paid the loan off in full in the first month with no pre-payment penalty. I think I spent tens of dollars in interest for that $1.5K.

I did something similar with my car. It was actually cheaper to lease the car and pay for the 3 years of lease payments up front, then it was to pay cash since the dealership was giving a $4500 lease incentive and the money factor of the lease (basically the interest rate) dropped from like 6% to 0.5%. I have no car payments for 3 years, and then have the option to buy it at the end of the lease...which I probably will since I only put on about 6500 miles a year.

 

[mustinjourney]

To spend $10-$15k cash on a luxury purchase in the middle of a recession deserves to be rewarded with a low price. I hope the market is not too overvalued right now, but don't think prices will come crashing (unless another downturn at which point you have to be willing to steer into the uncertainty even more).

Recessions are garage sales for the rich.