Resale value in 15 years?

[timC]

Maistre, thanks.

Do you think this might raise the demand for DVC in the latter years?

Maybe... that's why I put a disclaimer. There are whole lot of factors that drive price.

 

[JerseyBob]

I definitely was not concidering becoming a DVC member as an investment or to make any money. However, it is a difficult decision for me to make since we normally would stay at a moderate resort (almost always during Easter break) and therefore the break even point would be many years into the future. I also wonder if at a certain point (10 to 15 years?), my family would get tired of going to WDW every year. I know about the exchange priviledges, but not too many of those appeal to me. I'm still leaning towards becoming a member, however, it would not be for "financial advantages". Thanks for all the imput.

 

[FriendsOfEeyore]

I think my answer is (or guess)...

I AM NOT GOING TO SELL. It took me too long to commit to buy. I only have 39 years left and I am going enjoy every last one of them, no matter the financial sitautions that arise in my future. This is an investment. An investment in me. An investment in my vacation time. An investment in my family time. No price can take that away from me. I could care less if someone thought my dvc contract was worth $5, because that would mean that I am going to WDW for $5.

 

[joepoe]

Originally posted by Maistre Gracey
I think DVC will maintain the same numerical dollar value almost to the very end.
Let's fast forward to the year 2041. How much would you pay for DVC with only one year left?

A rough guess suggests that in the year 2041 all prices will be about triple of today's prices. That means a $250 room rate (tax included) will cost about $750. Of course, this also would mean that a $4/pt maintenance fee would now cost $12/pt.

To spend a week in the hotel room will cost $5250 per week. A DVC studio will still "cost" 106 points. At $12 per point in maintenance fees, the weekly cost (maintenance fee only) would be $1272. This leaves $3978 left over for the cost of points. If we then divide that figure by the 106 points needed to stay for the week, we see we could spend $37 per point and still come out ahead.

As we can clearly see, in the year 2040 a resale could easily sell for $70 per point, and still be a good deal. For that matter, in 2039, $100/pt is not unlikely.

In summary, the numerical price of DVC may never decrease. If you factor inflation, at some point the true value of DVC will decrease.

Building upon this line of thinking, I did a spreadsheet of the present value of 39 years of vacations, and the price per point (all things being equal)keeps going up every year until it levels off at year 19 and begins to decrease in year 21.

 

[Dean]

While DVC is obviously not your average timeshare, I think those that assume it will make sense based solely on room prices are kidding themselves. DVC only makes sense for very specific circumstances now, I doubt that will change in the future. Don't count on the value staying up indefinitely.

 

[Maistre Gracey]

Originally posted by Dean
While DVC is obviously not your average timeshare, I think those that assume it will make sense based solely on room prices are kidding themselves. DVC only makes sense for very specific circumstances now, I doubt that will change in the future. Don't count on the value staying up indefinitely.

But, I would think that if on-site prices are high, than DVC prices could not fall too low. The demand for DVC would be too great. All the guests staying on-site would be foolish not to pay only 60-70% by purchasing DVC.
I think in the latter years DVC may become even more popular, as the need to commit to 39 years of maintenance fees, and high buy in cost is eliminated.

Of course, this is all just speculation....

 

[Dean]

Originally posted by Maistre Gracey
But, I would think that if on-site prices are high, than DVC prices could not fall too low. The demand for DVC would be too great. All the guests staying on-site would be foolish not to pay only 60-70% by purchasing DVC.
I think in the latter years DVC may become even more popular, as the need to commit to 39 years of maintenance fees, and high buy in cost is eliminated.

Of course, this is all just speculation....

I still think you are beeing way to optimitic. It's certainly possible for the Disney resort prices to keep going up enough to prop up the DVC prices, but I think the estimates are way to inflated. Personally, I'd think DVC would have to return a room at less than 50% of the rack rate AT THE BEST and possibly more like 50% of the discount rate to make this a viable issue. Also remember we're comparing to what will then be the old resorts. If WDW builds new, deluxe or near deluxe resorts, that will negatively impact this issue as well.

Remember that even now we see people post that they should have done it 10 years ago when they first looked at DVC but after 10 years of going every year, they still haven't or just did join. Closing costs also are likely to eclipse a full 2-3 years worth of savings. The idea that people will buy in the last few years because it's not a long term commitment is also very questionable to me. JMO.

 

[Lisa P.]

...we normally would stay at a moderate resort (almost always during Easter break)... I also wonder if at a certain point (10 to 15 years?), my family would get tired of going to WDW every year.

Is yours a family of 3 or 4, who would be able to fit in a DVC studio unit or would you have to book 2BRs? The DVC resorts are lovely resorts. Would they please your family or do you want to stay at non-DVC resorts, for more variety? Do you always stay onsite?

According to the Disney website, if you planned to stay during Christmas week 2003 (similar to prime holiday Eastertime), a rack rate, 7-night stay at a moderate resort would be $1,436 including all taxes. Multiplied by 10-15 years, this is $14,360-$21,540.

The DVC points required for the same stay in a studio at OKW would be 147. 150 points at OKW cost about $10,500 resale plus annual dues of about $523. 10-15 years of membership would cost about $15,730-$18,345.

The DVC points required for the same stay in a studio at any other WDW DVC resort would be ~181. 180 points at BCV from DVC costs about $15,120 plus annual dues of about $715. 10-15 years of membership would cost about $22,270-$25,845.

Those are the two extremes of what DVC would cost. If you then sold, whatever amount of money you received would be deducted from your total costs. This is a very simplistic way of looking at the figures.

Some will look at the numbers and say it's cheaper and easier to book for cash, hope for discounts, have complete flexibility in year-to-year planning, invest the purchase money elsewhere and not have to worry about taking out a purchase loan, adding interest payments to the above. Others will say they would expect to see a large portion of their purchase money return to them, making it worthwhile. What you may need to decide is... is it worth tying up (and possibly losing some of) your upfront purchase money for the perceived benefits of DVC membership? For some folks, the answer is a resounding yes!, for others no! and for many, it takes more consideration. HTH.

 

[radiojon]

When doing comparisons to DVC vs. "rack rates", I think it's important to remember that anyone can rent other members' points (even though most people outside this group don't even know about it). This is a viable third option for those of us considering membership. We're renting points for a stay in a few weeks, and saving nearly 50% by renting points from a DVC member. We're not sure about plopping down the $12K-$18K right now to join DVC, and are a little worried that after the kids are grown, we won't want to vacation at Disney as much. So, we're content with renting member points for the next few years ... at a SIGNIFICANT savings over what we used to pay for our Disney vacations! And without having to make the commitment to go every year. It's giving us the time to enjoy the member privileges while we decide if we can truly afford to make the investment. Were it not for discovering this message board, we'd have never known about it! Not as cheap (per visit) if we actually end up joining sometime in the future, but renting points can save big bucks in the meantime!

 

[Darian]

Hi everyone,

I'm not a DVC member, but find the possibility intriguing. I've heard mention on this thread that your membership expires after a time? One poster mentioned 2042? Is this correct? If so, what happens to all the money you have invested? Does it vanish? Does the membership just dissolve with nothing to show for it?

This is probably a very stupid question, and is something that every DVC member already knows, but please bear with me as I'm new to this subject.

Many thanks,

Darian

 

[vernon]

Darian, the current DVC resorts all have an "expiration date" of 2042. Look at it as a lease property if that helps you to understand it. You're paying for the use of that facility/property for a certain amount of time. So to a degree you're correct at the end of 2042 there will be no "asset" left .
The new SSR will apparantly have a 50 year lease ( i.e. ends in 2053 or 2054 depending on when sales are first registered from)

 

[JerseyBob]

Thanks everyone for your helpful posts. Lisa - why do you say if you don't normally spend just long weekends or Christmas/Easter vacations there, DVC may be worthwhile? Easter vacations are when I would normally go to WDW and I was wondering your reasons why DVC would not be good for that time? I know that the DVC points are higher then, but so are the room rates and the discounts are hard to get for that period (maybe AAA). Thanks for your other helpful post too.

 

[Darian]

Thanks Vernon for the explanation... that helps a lot! Mmmmm DVC sounds like fun... I should check into it....

Darian

 

[WDWguruDH]

Tough question...timeshares usually tank in value, but in the last 10 years DVC resells are almost 150% of the original retail price. Why, ROFR - DVC wouldn't buy it if they couldn't sell it. I believe that the reason is that DVC is one of the few (if not only) timeshares that can be directly connected to the price of other resorts: on-site WDW resorts. The off-site DVCs have not fared as well as the on-site, probably the only reason they are doing anything is they frequently get tied to the on-sites in sales presentations.
There are too many factors to try and come up with an actual value at a given time. I do believe the DVC value will continue to be tied to the cost of an on-site resort stay. As long as WDW does well, does not overbuild and the cost of resort nights continues to go up, I believe DVC will continue to increase. At some point the initial cost will outweigh the remaining time and the value will freeze or fall - when, that depends on what the cost of resorts do, historically they have increased 7.1% a year.
Answer to "Resale value in 15 years" - hard to tell, I think a majority of the principal is "safe" for the foreseeable future, but definitely do NOT look at DVC as an investment. To justify costs, simply compare the costs over the next 10 years to what you would spend staying onsite, even with moderates, you will come close to a break-even, then you are staying just for the costs of dues.

 

[Lisa P.]

why do you say if you don't normally spend just long weekends or Christmas/Easter vacations there, DVC may be worthwhile? ...the DVC points are higher then, but so are the room rates...

There are 5 DVC seasons: Adventure; Choice; Dream; Magic; Premier.

With Disney rack rates for hotel rooms, there are 4 seasons: Value; Regular; Peak; Holiday.

Compare a couple comparative scenarios.
------------------------
Switch DVC reservation from lowest Adventure season highest Premier season:
Pay an increase of 71-84% more points.

Switch cash reservation at PO (moderate) or BC (deluxe) from lowest Value season to highest Holiday season:
Pay an increase of 38-55% more $.
------------------------
Switch DVC reservation from Magic (almost all school break periods, including midsummer and most spring breaks) to Premier, Easter or Christmas:
Pay an increase between of 30-37% more points.

Switch cash reservation at PO or BC from a midsummer week (Value or Regular season) to Easter week (Peak):
Pay an increase between 22-36% (biggest difference at deluxe, where summer is cheap, Value season).

Switch cash reservation at PO or BC from any other spring break week (Peak) to Christmas week (Holiday):
Pay an incease between 8-14%.

Switch cash reservation at PO or BC from any other spring break week (Peak) to Easter week (Peak):
Pay the same price! No premium.
------------------------
In all of these examples, the incease in DVC points for usage at Easter is greater than the increase in cash rack rates. DVC really charges a high premium for those members who wish to stay during Premier season, especially Easter week. If that's when you intend to vacation, you need to be aware that your "breakeven point" will likely be further into the future than most others, as a result. Hope that made sense.

 

[KANSAS]

bump

 

[disneycrazed139]

I think without knowing what will be done in the year 2042 the whole point is moot.

 

[Richyams]

I think that with how well mantained those buildings are, how well we are funding rehabs and replacement, these buildings are going to be like new in 2042.

They are going to extend ownerships one way or another.

I think the only question is extending current contracts. I assume that under present laws they would have to commit another period to the whole thing, another fifty years??? I think so.

Now how do they sell it?

50year extension bought in 2032 for $25 per point. You are buying ten years early, they are getting this appreceable amount of oney, this early....but I think that the number of buyers for something ten years down the road is pretty small.

50 year extension bought in 2037 for $50 per point. I think you have the same problem here, but this will soon be viable at eough of a discount.

10 year blocks of extensions for ????? I don't think so.

50 year extension bought in 2040-42. $89 per point(whatever the current price is as there will be resorts now with an ending date 2075, straight rollover, (Closed for a year for reno???)

But how much of a discount do I get being an original OKW buyer?

 

[ncligs]

Originally posted by Richyams
But how much of a discount do I get being an original OKW buyer?

Rich
You will be 80 in 2042.........I wouldn't lose any sleep

over it.

 

[princess&tig]

I think there is a strong possibility it will be worth more for the following reasons:

Hotel Costs - I am sure you all heard that they are raising at 7%, That could be true. Expecially if all of the 9/11 stuff is behind us. If the future has costs of $500 per room, we will be saving money big time. Everyone will want our deal

New DVC resorts - If Disney stops creating new resorts the supply will be constant but demand will always be there and probably much greater in the future.

Space for other new resorts - I know WDW is very big but they are running out of room on their lakes and rivers.

If WDW remains more popular than Universal - If staying at WDW is the place to be, we are in the right place. The best thing that can happen to our homes is for Disney to continue expanding.

I would say that their is a significant chance that our investments would be worth much more but who would sell? I love WDW and DVC and it would not matter to me if it was worth 5$, I get to have the best family times in the best place on earth and would not trade it for a million $ (unless I could use the million to buy more points).

Tigg