Maybe its just me, but it appears appears Disney has excercised it's right of first refusal (ROFR) more frequently. Do you believe the DVC resale market has reached its bottom? Is that the reason for so many ROFRs from Disney?
Maybe its just me, but it appears appears Disney has excercised it's right of first refusal (ROFR) more frequently. Do you believe the DVC resale market has reached its bottom? Is that the reason for so many ROFRs from Disney?
I believe that the "bottom" of the resale market is a moving target and subject to a lot of different factors. While we may have seen a momentary bottom I would expect that resale prices will see further lows as time goes on ... (think about what may happen in another 5-10 years as the expiration date for a number of resorts gets closer and what will resale rates be like in 2040 with many contracts expiring in 2042).
Enjoy the current "bottom" while you can, but expect more lows as time goes on.
In my opinion that will only happen if Disney lowers the prices buying directly from them. Disney still sells all 10 resorts and since 1991 have always raised their prices even though the number of years remaining on the contract have gotten smaller. If Disney starts dropping the price buying directly from them then I would expect that to bring the resale prices to their bottom.
Disney will probably figure out a way to get buyers to buy resorts directly from them in 2040 at $278 per point even though the contract is expiring in 2042. They will probably have the list price at $378 but if buy right now price only $278. They will figure something out.
Jason
In my opinion, that will only happen if DVC is still using ROFR in 2040 and is willing to buy back soon-to-expire contracts. If we use OKW as an example, DVC can presently sell some contracts (all with the extra 15 years). Resales for those extended contracts do not seem to be commanding the additional $15 per point paid by the seller (TTS has one listed today at $60 per point - effectively pricing the original contract at $45 per point plus the $15 extension).
In 2040, OKW contracts sold thru DVC directly will still have almost 17 more years for reservations, while resales of unextended contracts will have less than 2 years. Do you really believe that resales for non-extended contracts will still be selling then at current (2010) pricing? I don't believe DVC will have any interest in using ROFR for those contracts in 2040 since they will already get them back on February 1, 2042 without any expense - and they already own the extension on all non-extended contracts.
What pricing would you advise for a seller today if he was listing a contract that expired on January 31, 2010 and wanted a quick sale? Do you believe DVC would exercise ROFR at that (or any) price? The same issues will be in play as we edge nearer to 2042. While it appears that the current resale market might have bottomed out all DVC contracts will eventually have zero value as they approach their expiration.
I hope you'd at least agree that on January 31, 2042 a non-extended OKW contract would be a tough resale at ANY price.
It will be an interesting process to follow - although I will not likely be around to see what happens in 2040.
Stay Tuned!
In my opinion, that will only happen if DVC is still using ROFR in 2040 and is willing to buy back soon-to-expire contracts. If we use OKW as an example, DVC can presently sell some contracts (all with the extra 15 years). Resales for those extended contracts do not seem to be commanding the additional $15 per point paid by the seller (TTS has one listed today at $60 per point - effectively pricing the original contract at $45 per point plus the $15 extension).
In 2040, OKW contracts sold thru DVC directly will still have almost 17 more years for reservations, while resales of unextended contracts will have less than 2 years. Do you really believe that resales for non-extended contracts will still be selling then at current (2010) pricing? I don't believe DVC will have any interest in using ROFR for those contracts in 2040 since they will already get them back on February 1, 2042 without any expense - and they already own the extension on all non-extended contracts.
What pricing would you advise for a seller today if he was listing a contract that expired on January 31, 2010 and wanted a quick sale? Do you believe DVC would exercise ROFR at that (or any) price? The same issues will be in play as we edge nearer to 2042. While it appears that the current resale market might have bottomed out all DVC contracts will eventually have zero value as they approach their expiration.
I hope you'd at least agree that on January 31, 2042 a non-extended OKW contract would be a tough resale at ANY price.
It will be an interesting process to follow - although I will not likely be around to see what happens in 2040.
Stay Tuned!
What pricing would you advise for a seller today if he was listing a contract that expired on January 31, 2010 and wanted a quick sale? Do you believe DVC would exercise ROFR at that (or any) price?
What bottom? It's artificial due to ROFR...not a real bottom. The fact that DVD can artificially inflate the market price due to their use of ROFR means that any "bottom" is artificial unless DVD simply opts to not use ROFR any more.
By using ROFR aggressively DVD can try to stop a fall in prices...if they use it enough and there remains a large enough pool of buyers to match the increasing pool of sellers and those buyers want a contract bad enough...then those buyers will put offers in at or above whatever "stop loss" point DVD has set for point value.
However...if buyers continue to bid down the pricing...daring DVD to ROFR the contract...and they do it enough...at some point it is DVD that is going to bow to market pressure. They do not have unlimited funds...at some point it will make economic sense for them to say "No more!" and stop laying out cash to ROFR contracts. At that point, prices will fall.
You are spot on Mr Shark. If not for ROFR, DVC Resales would be much lower than they are. People who want in on a resale have to play by DVDs artificially constructed base price.
I have bid on several contracts... never had a counter offer (my read is people just need to get out at any reasonable price)... my bid has almost always been accepted.... and been ROFRd each time...
So as far as I am concerned the true market value at this point and time is what a willing buyer and a willing seller agree to transact at. Disney is artifically keeping prices up with ROFR. I bet SSR would sell in the $50s if ROFR did not exist.
I have considered bidding one several contracts at once trying to put pressure on DVD to capitulate. But knowing DVD they will have me keep all the contracts... sticking it to me!
As long as I have the luxury of time... I will keep playing the "market pressure" role.
I read a very interesting article recently that argued that ROFR tends to *depress* prices, not increase them. The intuition is that the rightsholder need not bid competitively in the market, and so that removes at least one purchaser from the demand side of the equation. After all, setting the ROFR floor above market price only leaves some potential purchasers (such as lawshark) deciding to forgo a purchase---which in turn tends to depress prices.What bottom? It's artificial due to ROFR...not a real bottom.
I may join you in providing market pressure before too long...we need more people fighting the good fight to force a re-evaluation by DVD. I would absolutely love to have some points. I'm fortunate enough to be able to avoid financing the purchase. I'm damn tempted to pull the trigger. But...
Price point is simply too high right now for me to justify the upfront cost. I want Epcot...BCV or BWV...and about 200 points. $16,000 though? Urmm...not sure that works. We're going for 6 nights in April...1 BR at Boardwalk (1st visit there)...for less than $2,000 through central res. Booking points would be 184 points I think...valued at $10...$1,840 plus $1,000 almost in maintenance fees.
Good deal how? Yes...over time, etc etc...
However...BCV or BWV at $12,000 for the 200 points...now we have a deal.