dmunsil
Disney Uber-Nerd
- Joined
- Jan 11, 2008
- Messages
- 1,456
Another weekend spent crunching numbers... 
The other day, wdrl asked me if I could "prove" that the resale restrictions reduced the resale value of people's ownership. I was kind of taken aback because it seems so self-evident that I'd never considered that you would need to prove it. And of course you can't really "prove" something like that. You kind of have to rely on common sense and economics.
But it got me thinking that it would be interesting to see what the average prices paid for DVC points before and after the restrictions kicked in. So I did that. There's no way I could do every DVC deed, so I focused on my own home resort, Boardwalk. I looked at a one-year period centered on March 2011 when the restrictions kicked in.
The restrictions were for any resale contract that was submitted for ROFR after March 20, 2011. Unfortunately I don't know when people submitted the contract, only when Disney actually issues the waiver. So I arbitrarily calculated an "estimated" submission date of 30 days before the waiver release date. During normal times, that number is too high, since Disney usually gets the waiver out between 21 and 28 days, but the volume during the period between the announcement of the restrictions and the submission deadline got so huge I think Disney was taking more than 30 days on average to issue the waivers. So I think for this period, 30 is a decent estimate.
I also looked at sales volume to cross-check. The announcement was made January 18th, and the volume of waivers being released took a huge leap on about Feb 16th, so that suggests 30 days was a little long at that stage, but not crazy.
Later, it seemed like the volume let up right at about April 20th, but there was still slightly elevated volume until May 20th. After that Disney added a little note to every waiver, first just saying that they weren't responsible for checking whether the seller had all the points they said they had. About a week later they added the language that says that buyers shouldn't rely on the incidental benefits being transferred with the ownership. I don't know if that means they were way behind at that point, or whether there were a lot of submissions that required more than 30 days to process, or something else. But I'm calling the point where Disney added the new verbiage to the waiver the switchover point. I think that every deed transferred before that point was grandfathered in. It doesn't actually matter that much to the analysis.
There's a ton of noise in this data set, so some amount of time averaging was necessary to get a handle on the moving average price. I ended up generating a rolling two-week average of the price per point and plotting that against the date of the end of the two-week period. The date given is my estimated submission date, or 30 days before the ROFR waiver was issued.
I've divided the graph into three sections: Pre-Announcement, Announcement to Deadline, and Post-Deadline. I plotted a linear trendline for the pre- and post- periods to try to get a handle on the general price level for those periods.
I would say the bottom line seems to be that the restrictions were worth about 10% to the market, or $5-$6 per point of BWV at that time. That doesn't seem crazy to me. I think if Disney offered me the opportunity to get the restrictions lifted for $5/point, I'd think very hard about it (and probably not take the offer).
Below is the graph of rolling average prices for the period. It's fascinating to see the section there in the middle, as tons of people frantically tried to get their contracts in by the deadline. I'm also intrigued by the amazingly smooth U-shaped price trend during the first portion of the "countdown" period. My take on it is the baseline starts low, because the resale value of contracts had already gone down, but then there were buyers willing to bid prices up from that baseline to get a contract before the restriction. Then as the restriction approaches, people start offering less because they're not sure it's going to make it before the deadline. And then there's a little spike as people offered a lot, probably contingent on the sale being submitted before March 20th. And the dribble of contracts after that is just Disney working through the contract backlog.
And here's a graph of sales volume (in points rather than contracts):
The other day, wdrl asked me if I could "prove" that the resale restrictions reduced the resale value of people's ownership. I was kind of taken aback because it seems so self-evident that I'd never considered that you would need to prove it. And of course you can't really "prove" something like that. You kind of have to rely on common sense and economics.
But it got me thinking that it would be interesting to see what the average prices paid for DVC points before and after the restrictions kicked in. So I did that. There's no way I could do every DVC deed, so I focused on my own home resort, Boardwalk. I looked at a one-year period centered on March 2011 when the restrictions kicked in.
The restrictions were for any resale contract that was submitted for ROFR after March 20, 2011. Unfortunately I don't know when people submitted the contract, only when Disney actually issues the waiver. So I arbitrarily calculated an "estimated" submission date of 30 days before the waiver release date. During normal times, that number is too high, since Disney usually gets the waiver out between 21 and 28 days, but the volume during the period between the announcement of the restrictions and the submission deadline got so huge I think Disney was taking more than 30 days on average to issue the waivers. So I think for this period, 30 is a decent estimate.
I also looked at sales volume to cross-check. The announcement was made January 18th, and the volume of waivers being released took a huge leap on about Feb 16th, so that suggests 30 days was a little long at that stage, but not crazy.
Later, it seemed like the volume let up right at about April 20th, but there was still slightly elevated volume until May 20th. After that Disney added a little note to every waiver, first just saying that they weren't responsible for checking whether the seller had all the points they said they had. About a week later they added the language that says that buyers shouldn't rely on the incidental benefits being transferred with the ownership. I don't know if that means they were way behind at that point, or whether there were a lot of submissions that required more than 30 days to process, or something else. But I'm calling the point where Disney added the new verbiage to the waiver the switchover point. I think that every deed transferred before that point was grandfathered in. It doesn't actually matter that much to the analysis.
There's a ton of noise in this data set, so some amount of time averaging was necessary to get a handle on the moving average price. I ended up generating a rolling two-week average of the price per point and plotting that against the date of the end of the two-week period. The date given is my estimated submission date, or 30 days before the ROFR waiver was issued.
I've divided the graph into three sections: Pre-Announcement, Announcement to Deadline, and Post-Deadline. I plotted a linear trendline for the pre- and post- periods to try to get a handle on the general price level for those periods.
I would say the bottom line seems to be that the restrictions were worth about 10% to the market, or $5-$6 per point of BWV at that time. That doesn't seem crazy to me. I think if Disney offered me the opportunity to get the restrictions lifted for $5/point, I'd think very hard about it (and probably not take the offer).
Below is the graph of rolling average prices for the period. It's fascinating to see the section there in the middle, as tons of people frantically tried to get their contracts in by the deadline. I'm also intrigued by the amazingly smooth U-shaped price trend during the first portion of the "countdown" period. My take on it is the baseline starts low, because the resale value of contracts had already gone down, but then there were buyers willing to bid prices up from that baseline to get a contract before the restriction. Then as the restriction approaches, people start offering less because they're not sure it's going to make it before the deadline. And then there's a little spike as people offered a lot, probably contingent on the sale being submitted before March 20th. And the dribble of contracts after that is just Disney working through the contract backlog.
And here's a graph of sales volume (in points rather than contracts):
