Resale Market Outlook

[Dean]

I think it's two different questions. 1) is whether you can afford it and 2) is now a good time vs the future.

#2 it seems like the consensus is a major economic downturn is the only way prices fall signicantly, which are hard to time. Or 15yrs or less on the 2042 resorts.

Personally I think the only way the current trend continues is best case scenario. There are a lot of things that can drive down the price. Personally I think they're inflated now. To me the only questions are whether DVC makes sense NOW and only after that, can one afford it. If it truly makes sense, the future isn't overly relevant other than one's projections and mostly that plays into whether DVC makes sense anyway. If one has to wait for other reasons, one needs to reevaluate whether DVC still makes sense at the time. There is a cost of waiting, the question is whether there is a savings or other benefits also. If all else is in place, simply waiting hoping prices come down doesn't make any sense.

 

[Brian Noble]

that includes zero % cars or CC

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.

 

[DVC Doctor]

I think what Dean is saying is to pay cash and do not finance any non essentials (food, drink, housing, etc.) and that is great if you have cash, but most people need to get a mortgage to buy a home, need a loan or a lease to drive a new car, and need a loan to buy DVC. Sure a home and car are more important than DVC, but it is not like you are buying into a Westgate timeshare.

Not all loans are bad, I just think he does not believe in leverage of any kind that could jeopardize a homestead. I, on the other hand, agree in principle with what he is saying, but in reality most people need some form of financing for large purchases.

There are many instances where buying DVC is a fantastic deal (as compared to renting or paying Disney cash rates, etc.) and even with a "smart" loan it is a good purchase. I always cringe when I read about people paying 10% or more interest to finance a DVC purchase and I agree that people should avoid those loans and NOt buy DVC. But a low interest loan makes sense if you do not have the cash to buy without financing.

 

[Dean]

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.

The key word is if you can AND do pay it off, the reality is that most don't and sometimes things happen that they can't. Brian my view is there is no good consumer debt. I also believe that debt is mostly about behavior and very little about math. It represents risk, plain and simple. I'm not against playing games with such issues, financed a timeshare one time I was going to buy anyway to get the incentives then paid it off in a month. I realize there are degrees of risk here but for most, financing represents buying something they couldn't afford. One who choses to finance but doesn't have to is taking far less risk but they are still taking risk and are in the minority. But the reality for something like DVC isn't the person who has plenty of money and decides to finance usually they have significant other debt like cars, HELOC, credit cards, student loans, etc. I firmly believe that if one wants to own DVC they can save up and buy within 2 years and if they can't it's either something they can't afford or not really important to them or both. Just do a search for net worth or retirement savings to see how bad it is.

 

[DVC Doctor]

The key word is if you can AND do pay it off, the reality is that most don't and sometimes things happen that they can't. Brian my view is there is no good consumer debt. I also believe that debt is mostly about behavior and very little about math. It represents risk, plain and simple. I'm not against playing games with such issues, financed a timeshare one time I was going to buy anyway to get the incentives then paid it off in a month. I realize there are degrees of risk here but for most, financing represents buying something they couldn't afford. One who choses to finance but doesn't have to is taking far less risk but they are still taking risk and are in the minority. But the reality for something like DVC isn't the person who has plenty of money and decides to finance usually they have significant other debt like cars, HELOC, credit cards, student loans, etc. I firmly believe that if one wants to own DVC they can save up and buy within 2 years and if they can't it's either something they can't afford or not really important to them or both. Just do a search for net worth or retirement savings to see ow bad it is.

I actually agree with you post and view, however, this is sorta along the same "avoid Starbucks and invest the $5 per day in an IRA and see how much is grows" The issue is delayed gratification and that is not something Americans do very well.

Sure if you can pay cash and you love Disney and plan to use DVC for 7-10 years then it is a very sound financial purchase. That does not mean financing at 5% is bad either, however, anyone that finances any timeshare with minimal down payment and gets 10% or more interest rates is making a mistake.

Also, if people really want to join DVC and have limited funds, then buy a 25 to 50 point contract in cash and transfer in points from other members as a rental.

 

[Dean]

I actually agree with you post and view, however, this is sorta along the same "avoid Starbucks and invest the $5 per day in an IRA and see how much is grows" The issue is delayed gratification and that is not something Americans do very well.

Sure if you can pay cash and you love Disney and plan to use DVC for 7-10 years then it is a very sound financial purchase. That does not mean financing at 5% is bad either, however, anyone that finances any timeshare with minimal down payment and gets 10% or more interest rates is making a mistake.

Also, if people really want to join DVC and have limited funds, then buy a 25 to 50 point contract in cash and transfer in points from other members as a rental.

It's OK to disagree. Regarding the starbucks example, if you have consumer debt and buy the $5 starbucks, you're essentially financing the drink. The delayed gratification is exactly my point, it's not done well or often but it is the correct answer when it comes to finances in almost every situation and 100% of the time in buying a timeshare or even going on vacation at all. I'll disagree that financing a luxury item is OK or a good choice but I will agree there are degrees of bad. The problem is far too often people are talking themselves into it and making an impulse purchase.

 

[Brian Noble]

The key word is if you can AND do pay it off, the reality is that most don't and sometimes things happen that they can't.

Got it. I was thinking of the cases where I've had the cash on hand, but with a 0% window could let it earn a little bit of interest. Not much, but every little bit helps.

 

[supersnoop]

Got it. I was thinking of the cases where I've had the cash on hand, but with a 0% window could let it earn a little bit of interest. Not much, but every little bit helps.

When it comes to 0% auto loans, they're making their money in there somewhere. You're frequently better off with a credit union financing at 2.9% or less and taking other available discounts on the car.

 

[Dean]

Got it. I was thinking of the cases where I've had the cash on hand, but with a 0% window could let it earn a little bit of interest. Not much, but every little bit helps.

Brian, I realize my stance is off the beaten path but then so is delayed gratification in general. And if people truly did what I suggest, DVC likely wouldn't exist nor other timeshares and I wouldn't have gotten any of my other timeshares for pennies on the dollar to totally free (up front inc closing).

When it comes to 0% auto loans, they're making their money in there somewhere. You're frequently better off with a credit union financing at 2.9% or less and taking other available discounts on the car.

I'd agree one should look at the real costs, and when you do, you often see how bad they're really sticking it to you. Some of the worst ones are things like car leases, low interest credit cards and same as cash offers.

 

[DVCcurious]

I know, I like to drive myself nuts. Not just is it a good deal - but is it the best deal.

To quote Dr. Evil: "How about NO!"

The "best deals" were had back in 2011-2013 when you could get Boardwalk and SSR for $50-55 and BLT for $90, Beach Club for $75, OKW and Wilderness Lodge in the low 60's and Animal Kingdom at 70.

I don't think today's prices are a bargain. They may make mathematical sense, but they aren't the screaming buy they were 5 years ago.

 

[DVCcurious]

If you can't pay for it you can't afford it, it really is that simple .

That statement is downright unAmerican!

 

[suebeelin]

To quote Dr. Evil: "How about NO!"

The "best deals" were had back in 2011-2013 when you could get Boardwalk and SSR for $50-55 and BLT for $90, Beach Club for $75, OKW and Wilderness Lodge in the low 60's and Animal Kingdom at 70.

I don't think today's prices are a bargain. They may make mathematical sense, but they aren't the screaming buy they were 5 years ago.

I think those prices were the average in 2011-2012.

Based on my recollection, the lowest "bargain hunter" prices were a tad lower. I recall seeing a few bwv/ssr/Okw in the $40s, blt in the $70's, bcv at $60's, and Akl in the 60s. There was only a very short window with these prices. I remember wishing I had bought ssr, which may have had a few contracts sold in the 30s! I might be wrong about that though....

We did not buy at the lowest point. We were too frightened by the economic climate... but we were tracking the prices.

Prices slowly creeped up from that point until end 2014, when we bought our 2nd resale. Prices seemed to be $70 for bwv, $85 bcv, $90 blt, $70 akl, $65 ssr etc. at the end of 2014, give or take a few dollars.

Then they seemed to have quickly gone up since beginning of 2015, and have presumably stabilized.

 

[Dean]

That statement is downright unAmerican!

In a good way. Seriously, look around on the internet about people's savings for retirement and net worth averages. It's downright scary.

 

[Brian Noble]

I was really shocked to see that, of households that had some credit card debt, the average was something like $16K. Servicing that debt is about $1.3K/year.

https://www.nerdwallet.com/blog/average-credit-card-debt-household/

 

[DVCcurious]

Maybe our national anthem should be changed to that song that goes:

Sha la la la la la live for today
And don't worry 'bout tomorrow, hey

 

[BWV Dreamin]

To quote Dr. Evil: "How about NO!"

The "best deals" were had back in 2011-2013 when you could get Boardwalk and SSR for $50-55 and BLT for $90, Beach Club for $75, OKW and Wilderness Lodge in the low 60's and Animal Kingdom at 70.

I don't think today's prices are a bargain. They may make mathematical sense, but they aren't the screaming buy they were 5 years ago.

Yes they were. In 2011 I bought a Wilderness Lodge 150 put. Contract, fully loaded, for $52/pt, seller paying closing. Then rented all three years worth of points. Without doing the math, I figure the true cost to be somewhere around $35/pt. For 6 years I rented this contract. Made a nice profit on it through rentals and then the sale of it this year.

 

[Dtw002]

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).

 

[_auroraborealis_]

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).

I actually think luxury purchases will hold up just fine if there is a recession. The people who may have issues will be the people who financed and are more middle-class, haven't been fully funding retirement, or have shaky job outlooks.

Disney will exercise ROFR if prices come down.

 

[DougEMG]

I think those prices were the average in 2011-2012.

Based on my recollection, the lowest "bargain hunter" prices were a tad lower. I recall seeing a few bwv/ssr/Okw in the $40s, blt in the $70's, bcv at $60's, and Akl in the 60s. There was only a very short window with these prices. I remember wishing I had bought ssr, which may have had a few contracts sold in the 30s! I might be wrong about that though....

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

 

[Dean]

I was really shocked to see that, of households that had some credit card debt, the average was something like $16K. Servicing that debt is about $1.3K/year.

https://www.nerdwallet.com/blog/average-credit-card-debt-household/

The net worth numbers and retirement savings data are even more scary. People get there by habits including the things being discussed here. People who make poor decisions do so at most every turn. We've all done things that were not the best of choices but the key is to not make big mistakes and to make as few small ones as possible.