Should we wait for recession?

[Marionnette]

All awesome information - I feel a recession would lower resale costs, but leave direct costs unchanged. Disney does not lower their prices - ever.

No. Disney won’t lower their base prices. They won’t deflate the value of their product. But they could offer attractive developer incentives to boost sales during a recession.

 

[Bearval]

All awesome information - I feel a recession would lower resale costs, but leave direct costs unchanged. Disney does not lower their prices - ever.

You are right but they have the ability to offer incentives that have very low if any real costs to them. Such as buy so many points and get season passes for a couple of years. They get to write off the face valve of the passes as a marketing expense and it really doesn’t cost them much more than the (old school) paper and ink to print them.

 

[KAT4DISNEY]

You are right but they have the ability to offer incentives that have very low if any real costs to them. Such as buy so many points and get season passes for a couple of years. They get to write off the face valve of the passes as a marketing expense and it really doesn’t cost them much more than the (old school) paper and ink to print them.

The last recession they were doing things like that PLUS large cash discounts. If a recession is bad it takes more than an AP to keep sales up. Plus the base price was much less than it is now. It actually doesn't cost them anything other than opportunity to offer the cash discounts AP's and such do cost DVC something I believe.

 

[What_13th_floor?]

While I agree with you on the connection between hotel rooms and DVC pricing, I do not share your optimism regarding the resale market prices. Currently the 2042 resorts have a 12-18 year break even point depending on your method of comparison and pricing assumptions. That means that somewhere between 2024 and 2030 there will be zero savings in buying DVC vs. staying on property via other means (CRO or point rental specifically). That's only five years from now. That changes the equation and eliminates a fragment of the resale market. How big a percentage is the only question. Regardless, the prices on all of these resorts goes to zero, and my guess is that it will approach that point in a sliding fashion as opposed to a single steep drop.

Hi I am new to this forum (registered just so I could respond to this post) and am doing research for a DVC direct sale purchase. I don't have a great understanding of the stock market or real estate in general but I do crunch numbers and look out for the long term.

This is the first I have seen or read of anything pertaining to this specific topic and was wondering if you could explain what this means further? Are you saying that the rise of prices for DVC in points and dues could eventually lead to being equal to the cost of staying at the resort as a normal cash reservation? If I am reading this right it seems that you are saying by buying let's say $16,000 worth of points that by the time we have used those points that they actually break even for the "discount" involved the per point prices at that point will match the cash reservation prices.

 

[chalee94]

Keep in mind that as the years go by, more points will be needed due to increases.

This really shouldn't be true unless Disney pushes forward with their legally tenuous lockoff premium idea.

We'll see.

 

[kboo]

Trust me I get the FOMO. I bought 25 direct for the blue card a couple years ago. I don't regret it, but there's no way I would pay the delta with today's direct prices in my case. I'm not trying to a jerk, but I want you to seriously write down on what perks and small things you'll be missing out on, and then figure out how much those are worth to you.

Same here - we bought when the threshold was 25 points direct, and for about $1200-1500 more than those points would have cost resale, the blue card benefits were worth it. I had a friend who bought shortly after they moved the threshold to 75 points (and after the big direct price jump), and I did not feel that those benefits were worth $5000 more.** She is a happy white card owner.

Take the savings from resale and each trip do something special like a dessert party or other dinner or an park event. They are more consistently available and just as enjoyable IMO. Maybe more because it's done on your schedule and not at DVC's whim.

Agree 1000%. We did a HS after hours on our adults-only weekend and it was sooo worth it. Minimal waits for everything, and the park really did feel empty. The savings from our resale BLT purchase would pay for about 100 tickets.

** That was about the same price difference between a direct RIV purchase and adding on the same # of points at BLT. The discussions about whether to pay that extra $$ to be a direct member with blue card benefits (which I would argue are far less than the benefit of having another home resort) seem much less emotional than the discussions of whether to buy RIV direct or resale at a L14 resort.

 

[ELMC]

There’s an expansion pad between grand Floridian and MK. There’s also a spot just outside the park near Adventureland/Frontierland.

That location would be like grand Californian. They could charge whatever they wanted for that spot.

Even I would buy direct if they built that.

 

[ELMC]

All awesome information - I feel a recession would lower resale costs, but leave direct costs unchanged. Disney does not lower their prices - ever.

Not entirely true. VB dropped from $115 to $100 per point in January of 2018. I know this sounds nit-picky and for that I apologize, but the precedent has been set for Disney to not only offer sales incentives but to lower their prices as well.

Hi I am new to this forum (registered just so I could respond to this post) and am doing research for a DVC direct sale purchase. I don't have a great understanding of the stock market or real estate in general but I do crunch numbers and look out for the long term.

This is the first I have seen or read of anything pertaining to this specific topic and was wondering if you could explain what this means further? Are you saying that the rise of prices for DVC in points and dues could eventually lead to being equal to the cost of staying at the resort as a normal cash reservation? If I am reading this right it seems that you are saying by buying let's say $16,000 worth of points that by the time we have used those points that they actually break even for the "discount" involved the per point prices at that point will match the cash reservation prices.

Great question. I'll oversimplify my answer and then get more detailed if you need me to. I'm not saying exactly that. I don't think that at any point in time the dues will become so high that in any one year it would be cheaper to book a room directly with Disney than it would be to pay the dues on the points used to book a similar room with DVC.

What I'm saying is more long term. Basically, when you buy DVC (direct or resale) you are prepaying for the membership and the right to stay for less for each upcoming vacation. So let's say in year one you spend $15,000 to purchase DVC and another $600 in dues to stay for five nights at a DVC resort. You've spent $10,300 in year one. Compare that to someone who just booked a hotel room and spent $1,800 for those five nights and you've paid more. But each year going forward, you will be spending roughly $600 in dues and the person who didn't buy will spend roughly $1,800 to book the room directly. Each year they are paying $1,200 more than you and eventually there will be a crossover point where they have spent more in total than you have. From that point on you are winning by buying DVC.

The point I'm trying to make is that given the totality of the options available, the prices today are too high and we are close to breaching the value proposition of owning DVC, if we haven't already. Based on today's prices, the amount of time it takes for that crossover point to be reached is so far out that it is close to exceeding the life of the contract at resorts with a 2042 expiration date. When that happens, prices will have to come down in order for it to be more cost-effective to purchase DVC. Otherwise, there is a chance that you will never come out ahead financially by purchasing DVC. I would suggest that we have already reached that point in certain situations, such as a direct purchase at BCV.

As far as the newer resorts, the amount of time it takes to break even is much longer based on the higher price. The one huge flaw in my theory is that if at any point you sell your contract, the numbers skew way back in favor of purchasing vs. renting, regardless of whether or not it is direct or resale. It all depends on how much of your initial purchase price you get back. And that is why the 2042 dates and the resale restrictions are so important. Expiration and restrictions both have a very negative impact on resale value. If the value goes down too much, then owners get hurt badly on the exit. That doesn't matter to Disney, but it matters to all of us a whole lot.

Thanks for the question and I hope this helps.

 

[bakerworld]

IMO opinion it sounds like you're not ready to buy. We didn't buy until our kids were grown and gone - we bought for us. We found that instead of going every 3 years we were going 3 times a year so buying made sense. When you are in a situation where you go to a specific location multiple times a year then a timeshare makes sense.

 

[we"reofftoneverland]

I think you will be waiting a long time if you are waiting for a recession.

 

[Momtomouselover]

I think you will be waiting a long time if you are waiting for a recession.

Not so sure about this. Inverted yield curves, volatile market, and now the sudden spike in the overnight lending market. While I know not all finance experts agree mine has suggested that a slow down and "perhaps a recession" appears to be in the cards in the coming year. We are putting in some protections now. I was on the precipice of buying DVC direct but I might drag my feet until the new year. Plus, doing so lets me see what kind of price changes we see in MFs and future changes to benefits, resales, etc. I did tell my financial advisor that if I saw a great resale though all bets might be off on waiting. Waiting is hard, lol.

 

[we"reofftoneverland]

Not so sure about this. Inverted yield curves, volatile market, and now the sudden spike in the overnight lending market. While I know not all finance experts agree mine has suggested that a slow down and "perhaps a recession" appears to be in the cards in the coming year. We are putting in some protections now. I was on the precipice of buying DVC direct but I might drag my feet until the new year. Plus, doing so lets me see what kind of price changes we see in MFs and future changes to benefits, resales, etc. I did tell my financial advisor that if I saw a great resale though all bets might be off on waiting. Waiting is hard, lol.

I agree, you just never know.

 

[foreUT]

I think there often has been a trend of DVC taking back fewer contracts at the end of their fiscal year. That is 9/30. And they aren't looking to accumulate and hold a bunch of points. If they have been briskly enacting ROFR and have a bunch of points to sell then they have less incentive to act on new offers.

I agree. Plus, it is apparent to me that the only real goal at the moment is to sell RiV. I spoke w Guide this summer about purchasing more points, but wanted to purchase prior to end of summer in order to get 2018 points (bc of later in year UY.) Once I took RiV off the table, the only option he provided me was CCV at $210 pp. One would think if they really wanted to push points, no matter their origin, he would have mentioned the less pricey Resorts. But, he didn't. I just don't think they care that much about selling the Older resorts, unless you insist. Consequently, I think the ROFR is to clear the deck for outstanding requests, as much as price support, or else that $100 RiV resale would not have passed.

 

[CarolynFH]

I think the ROFR is to clear the deck for outstanding requests,

This idea is supported by past behavior, when DVD would pass up one contract and take another that was priced higher but was in a different UY. That’s before they were able to change the UY on points they took back. I’m sure other factors are involved, but I don’t think “supporting resale prices” is high on the list of factors they consider, if it’s there at all.

 

[CraigInPA]

I agree. Plus, it is apparent to me that the only real goal at the moment is to sell RiV. I spoke w Guide this summer about purchasing more points, but wanted to purchase prior to end of summer in order to get 2018 points (bc of later in year UY.) Once I took RiV off the table, the only option he provided me was CCV at $210 pp. One would think if they really wanted to push points, no matter their origin, he would have mentioned the less pricey Resorts. But, he didn't. I just don't think they care that much about selling the Older resorts, unless you insist. Consequently, I think the ROFR is to clear the deck for outstanding requests, as much as price support, or else that $100 RiV resale would not have passed.

It would not surprise me to learn that DVC Guides are incentivised with a higher commission on currently selling resorts, and a lower commission on sold-out resorts.

 

[foreUT]

It would not surprise me to learn that DVC Guides are incentivised with a higher commission on currently selling resorts, and a lower commission on sold-out resorts.

That is what I have thought for several years, but never heard any confirmation. It makes perfect sense w all that cash for the new product, bonuses would be available for the latest product they were pushing.

 

[chalee94]

I don’t think “supporting resale prices” is high on the list of factors they consider, if it’s there at all.

Agreed. (And I really don't think it's on the list at all. If the current DVC execs could legally damage resale contracts to cut the current values in half, I think they would do it in a second.)

 

[TonyaG83]

Not so sure about this. Inverted yield curves, volatile market, and now the sudden spike in the overnight lending market. While I know not all finance experts agree mine has suggested that a slow down and "perhaps a recession" appears to be in the cards in the coming year. We are putting in some protections now. I was on the precipice of buying DVC direct but I might drag my feet until the new year. Plus, doing so lets me see what kind of price changes we see in MFs and future changes to benefits, resales, etc. I did tell my financial advisor that if I saw a great resale though all bets might be off on waiting. Waiting is hard, lol.

The more I think about this, the more I tend to agree. I trade commodities (raw materials and alloys) for a living, and there is a huge slow down in buying and selling right now. When the tariffs were imposed because of the uncertainty of the new NAFTA and Chinese import restrictions, people over extended themselves to ensure they got what they needed before the borders closed. Even though those commodities have depleted and trade restrictions have been lifted in certain cases, no one is looking to restock. Trading in any form is the lifeblood of the current global economy. Any hinderance to that is pretty much guaranteeing a recession. Not “if”, but “when”.

 

[Can_Dannn]

So much amazing information and opionions

QUESTION FOR ALL: would a recession LOWER/IMPACT direct pricing?

 

[Yinn]

Same here - we bought when the threshold was 25 points direct, and for about $1200-1500 more than those points would have cost resale, the blue card benefits were worth it. I had a friend who bought shortly after they moved the threshold to 75 points (and after the big direct price jump), and I did not feel that those benefits were worth $5000 more.** She is a happy white card owner.

It's almost always going to be point in time though. I wish I knew about the 25 points direct when I came into the DVC game. But alas, I only had the 75 point option. I struggled with paying a $3500 premium for my direct points, but eventually did so. Now, I'm happy I got my blue card for **only** the 75 point requirement instead of the 100. If it one day goes to 150, I'm going to be saying the same thing to them as you're saying to me. Or at any point benefits could be added/removed to change that formulation as well. It's just such a crapshoot to say definitively that it's worth it or not worth it.

So much amazing information and opionions

QUESTION FOR ALL: would a recession LOWER/IMPACT direct pricing?

Or a similiar question, has Disney ever directly reduced direct pricing?