Resale value forecasting

[yzguy96]

Hi,

I am in the process of evaluating if dvc is meant for me. Family of 4...this is our third year in row going to Disney world. Kids are 6 and 4. Wife loves Disney but predicts after this year we might go every other year or at least 3-4 more times with kids. This would made more sense 3 years ago cause my break even would have came closer with this being my third trip in row. I just don't want to miss out on future saving 3 more years from now. I was thinking about a small resale contract assuming I go to Disney every other yr and just roll one yr at time. One of my question is how can I determine the resale of my timeshare 10 yrs from now if I decide to sell? Is there a formula based on yrs left on contract. I know I can't predict the market in the future but I would like to factor it in my scenario.

Thanks

 

[Msmithmd]

You can't, unfortunately. Or more precisely, you can predict that the value for a lot of the resorts is zero in 2042. And zero for other resorts some time later. What happens between now and then is a guess.

The timeshare market tends to swing more wildly than the housing market in a recession. Only two years ago, resale prices for the WDW resorts were dramatically lower than they are now. Resale properties at desirable WDW locations were trading in the fifties and low sixties per point. An improving economy, plus Disney increasing the direct prices on the older resorts, pushed the resale market higher.

Unfortunately there is no way to know with any certainty what the resale prices on any given property will be just three years from now, much less ten.

I applaud your looking at every angle in a purchase decision- but this angle is essentially opaque. Thus, look at it assuming you will hold to contract end, and the purchase is only worth the vacation stay savings. If you have no intent of holding it that long, you might well come out ahead renting from current members rather than owning.

Some say ensuring at least a ten year horizon is reasonable, and I would agree that doing a calculation with a ten year basis is a worthy mental exercise. But there's simply no way to know whether the oldest of the DVC resorts will be selling near where they are now; for more; or for much less, in 2024. All it takes is a now-unforeseen Internet style economic boom, or a major terrorist attack in Orlando, to completely destroy your math. (Let's all hope for the former!)

 

[yzguy96]

OK thanks! So I will be buying on the incline or rise of the market? Now I wish I bought 3 years ago when prices were low.

 

[Msmithmd]

It's higher now than a few years ago, but lower today than six months ago, overall.

I would submit that you can beat yourself up trying to chase the absolute lowest possible price as trended in the ROFR thread. For me, I'm content to look at the savings of a resale contract versus direct, and then find the contract that most closely matches my desired total points and use year. In buying DVC via resale, "great" can be the enemy of "good."

Absolute purchase price does of course matter, but a few dollars one way or the other isn't a huge swing versus the annual dues compounded over 20-30 years. Now, $50-70 price difference per point on some properties via direct sale versus resale- that's a difference really worth contemplating.

 

[DizBub]

While one can't forecast what the resale market will be in a few years I will say that spending less up front by buying resale will make it easier to limit a loss (if any) you may incur in future years.

If you want to buy into DVC, use it for a few years and want to sell.....Buy at smaller resorts with a great location. Loaded resale contracts at resorts like BLT, BCV and BWV will always be desirable and you can walk to 1 or more parks. Small contracts also go for a higher price at resale.

I, personally think there is value in actually using my points and feel if ever did sell my contracts and got less than I paid for them that it would still be gravy. But that's just me.

 

[maggiegirl]

I am thinking.... most resorts expire 2042 right? so DVC owners have 27 + years based on newer resorts for vacations. Wouldn't the resale value of these contracts start to lower the overall value in the resale market in 10 years from now where in some of these resorts there would be only about 17 years left of vacationing? Would it not make sense to think that # of years remaining + the increase in yearly dues affect the price of resale as the # of years left in the contract diminishes?

 

[yzguy96]

Seems like you can't predict the market. Correct me if I'm wrong but old key west started in 1991 at $51 and its currently at resale at $68 per pt on the lower end. Maybe makes more of a case to buy dvc? Over years the price didn't depreciate as I would have expect because of the expiration date.

 

[DizBub]

We bought BLT in 2009 and added on there a year later (direct), average price around $105 pp. Bought BCV resale 2 years ago for $72 pp. Right now looking at resale prices we could probably nearly break even if we sold them today. Considering that we used all the points and enjoyed them immensely it's a real win-win.

Don't forget that if you do buy and don't want to go from time to time (or ever again for that matter) you can rent your points for $10-$14 pp. Probably enough to pay your dues plus some every year. There will most likely be some value to those points right up until the end. People will always want to rent your points.

 

[lovin'fl]

Seems like you can't predict the market. Correct me if I'm wrong but old key west started in 1991 at $51 and its currently at resale at $68 per pt on the lower end. Maybe makes more of a case to buy dvc? Over years the price didn't depreciate as I would have expect because of the expiration date.

And we bought OKW in 2006 for $76pp. Though we bought AKV last year for $66pp, likely from someone who had bought it direct at $100+pp. We bought 2 small HH contracts for $50pp in 2012 and then another one in 2013 for $60pp. The DVC resale market is a wonky thing and tough to figure out....but it does seem to hold some value more so than any other timeshare out there.

Another thing I wanted to mention. We go to WDW and sometimes say that we are good to not go back for 2 years...then after about 6-8 months we start getting that itch to get back. So, if your DW says, now, that she thinks you guys can do every other year...she might change her mind . Even if you do go every other year, you can get a smaller contract and use banking/borrowing for your stays. Calculate the number of points it will take for your typical stay and buy half that. If your DW does change her mind and you find yourselves going every year, you can add on.

 

[PacoDF]

IMHO most resorts contracts will hold their market value (not their direct retail price) almost flat during the first 30 or even more years (corrected by inflation of course). Only during the final 10-15 years the market price should drop lower. Of course the market value can and sure will change due to market changes: new resorts, new retail prices, external crisis, changes in the demand due to Disney new parks/atractions/events, etc.

Why I think this? Because most potential resale buyers do, as they should, evaluate DVC with a 8-10 years term in the future. So as long as the contract have more than 10-15 years remaining, the value should be lower but not as lower as a lineal depreciation... Value (points) that is more than 10-15 years in the future has little present value today, so the first 10 years of a contract (after purchase) are the most important part of the contract for any potential buyer today (present value).

 

[lovewdwfun]

If you are only planning to go 3-4 more times, I would rent points. You can't count on making any money on it and you probably don't want to be paying dues on years that you aren't going to Disney. While I love owning, there are downsides. Many resorts are difficult to get into and you have to book far in advance. If it were me, I would rather rent or pay Disney directly if I were only going every few years.

Plus, I have to warn...it is addictive and you may add on! Our fantastic 150 pts at SSR ($50pp a few years ago) was a great deal. The 80pp 250 point BWV contract I am buying? Well, I don't just buy DVC for a great deal!

 

[yzguy96]

Yeah 3-4 is a conservative number. I was thinking a small contract and just going every other yr to start. But I know once my wife gets a taste she will want to go every year. She is concerned that the kids will eventually get too old for Disney and we would be wasting it. But I would go for f&w or Hawaii or hh.

 

[DizBub]

Yeah 3-4 is a conservative number. I was thinking a small contract and just going every other yr to start. But I know once my wife gets a taste she will want to go every year. She is concerned that the kids will eventually get too old for Disney and we would be wasting it. But I would go for f&w or Hawaii or hh.

My kids grew up going to WDW. All adults now and still go. My youngest has her own DVC and the oldest is going to buy her own contract. Middle one is content to be treated every other year. She knows she'll be getting a 3rd of ours sometime in the future. They will never be too old for Disney.

 

[disneynutz]

Plan on zero when you sell and anything else would be positive. There are so many things that can happen between now and then both with Disney and with the world outside of Disney.

Bill

 

[skier_pete]

I think it's a bad idea to buy into DVC on the basis that you have to be able to resell it for a certain value 10 years from now. There could be a complete world economic collapse in 2022 and the resale values of DVC plummet. Lots of other things factor, if Disney continues to build new units (which they will) then the older property values will start to drop as people want the longer leases.

DVC is a short-term windfall for Disney and a long-term windfall (10+ years to reach the benefit) for the purchasers.

If you don't think you are going to use it frequently, or only for a short period of time, then just rent points to get the benefit of DVC without the up-front expense. If you think you are going to continue to use it for the next ten years or more, factor the up front cost and the maintenance fees and see if it is worth it. Factor any resale value as a ponential benefit but not critical to ownership.

 

[yzguy96]

OK thanks! I might just get a small contract and go every other year. If I see us going every year then I'll buy another contract. I think it will take 5 trips to get close to break even assuming I always stay deluxe. Every other year always allows me to go somewhere different on the off years.