OK, wdrl, I think I get what you're saying. I still disagree, but I think we have some common ground to work from.
I think I practically wrote a book in this post, so if this is too long, let me sum up by saying, "nuh uh!"
To your credit, you are quickly earning a well-deserved reputation here on the Disboards as a knowledgeable source who uses facts and figures to assess the the financial value of DVC ownership in general and the resale market in particular. You have been very good at laying out the facts and letting others form their opinions.
Thanks, that's very kind of you to say! For what it's worth, I've been working this problem, in a sense, since 2005 when my sister bought into DVC. She asked me to work the numbers for her and I came to the same basic conclusion then as I did recently - that it's a good deal. We didn't buy then because our financial position wasn't the same, and we weren't really sure we'd be going to WDW enough to make it worthwhile. As it turns out, we did, so I kinda wish we'd bought back then.
In 2011, when my sister told me about the new restrictions, my immediate reaction was, "the current owners should be really upset about this; it reduces the resale value of their contract." My sister hadn't thought of it that way; she was happy that she'd gotten in before the restrictions, even though she never uses her points for non-DVC stuff because it's not a good deal.
We were actually considering buying around then, and I didn't end up going forward on it because the whole idea of Disney creating a "two tier" membership left a bad taste in my mouth. Disney has always had a better timeshare product than anyone else, largely because they never played these games. They have the best resale value, to the best of my knowledge, in the timeshare industry. If Disney was turning into just another timeshare company, I thought, why bother getting involved?
Eventually I made my peace with it and bought in. Shortly afterward I found out about the fact that resale buyers are excluded from the member cruise. Once again, I wish I could not be bothered by it, but it leaves a bad taste. To be honest, I think it's really stupid that Disney would do something like this. They have a brand to protect, and it seems to me it couldn't be worth it to make some of their guests feel second class. But they can do what they want.
Sorry, that's a lot of background. I just wanted to let you know that this isn't some conclusion I jumped to recently.
If the statement had been prefaced with "I believe" or "Lots of people think", it could not be disputed. However, as it was stated, there was no qualification in that statement. It is stated as if it were a confirmed fact, not as a closely held belief or assumption.
Yes! Because I believe it's a statement that is
true, like "water is wet" or "the sun rises in the east". Saying that "some people think it's true" is not strong enough to express my belief that Disney's restrictions on resales reduce the resale value of every owner's contract.
I mean, I could be wrong. But the idea that restrictions on what you can do with a property lower the value of that property is pretty central to my understanding of economics, finance, psychology, human nature, life, Zen and the art of motorcycle maintenance. So I would need a better argument than "prove it" to shake that belief.
I never thought you believed that the resale prices would move a particular amount. Yet, the statement at issue clearly states that the resale value would go down.
Right. I don't know the magnitude of the effect. I know that it is negative. I suppose it could be zero, or so close to it as to be immaterial. But in that case, it's not actually working, and then Disney is just being petty. Which is worse? If Disney is harming resale values or is just being mean?
I do not concede that restrictions reduce resale value in every case. Some resale buyers, like myself, place no value on having those exchange privileges.
OK, now here we're talking past each other. When we speak about the "resale value", really we're talking about an estimate of what a thing would sell for today if one tried to sell it. There's no guarantee of what exactly it would sell for; you would need to sell it to find out. But you can look at the average price of similar properties that have sold and call that the expected resale value. And in fact when people do sell, the price clusters around the current resale prices other people have paid. That's just a function of markets.
So when I say that restrictions "lower the resale price" I mean that the average resale price goes down. You, specifically, are not guaranteed to get a lower price, but it does reduce your odds of selling above any specific price and raises your odds of selling below that same price. The market average, though, is essentially guaranteed to move down. Again, maybe by a trivial amount, but definitely down.
And even though there are people who assign no value to the perks that are restricted, some people do assign value to them; we see it here on the boards. Disney apparently feels that the restrictions add value for Disney. If they failed to increase direct sales it's unclear why Disney would continue them.
If I were to sell any of my deeds, I may find bidders who feel the same way I do. Thus, the presence of the resale restrictions neither helps or hurts in setting the value of my deeds.
I don't agree. It absolutely hurts in setting the value of your deeds. The value is not considered in isolation from every other sale; it is based on what people have paid recently. If fewer people are buying resale because direct is marginally more attractive, the prices must come down to attract the marginal buyers. Even a buyer who doesn't care about the resale restrictions does care about getting a good deal, so his price will be anchored to the market price, and the market price is set in the aggregate, not by a specific buyer.
There are probably a larger number of resale buyers who don't know about the Member Cruise restriction. These uniformed buyers are not letting the restrictions set the value they perceive in a resale deed.
Sure. But not everyone needs to have perfect information for a market to move. The people who do care about the restrictions either stay out of the resale market, or refuse to buy until they can get a larger discount. This drives the price down.
Its the second point that I think is the most flawed. Demand can increase for both direct sales and resales at the same time.
OK, there is a concept at work here called "independent variables." It can be true simultaneously that the overall number of buyers is going up while at the same time the proportion of buyers that are choosing direct over resale is going up. One variable does not affect the other variable (though they both
independently affect the final prices).
So if resale restrictions "work" to suppress resales, there will be
proportionally fewer buyers looking at resales, and the price of resales will be suppressed. This is not in an
absolute sense, but
relative to what the price would be if there were no resale restrictions. Other market forces might be moving the overall average up or down as well, but all of those changes "stack."
If a poll was taken of existing DVC members who bought VGF over the last few weeks, how many would list having all direct sale privileges as more than a trivial factor in their purchase?
Not a good example. You can't buy VGF resale, so the answer is basically "none." On the other hand, many AKV buyers took into account the resale restrictions? It's not zero. We see people here
all the time say they won't buy resale because they want to use their points for cruises. I feel sorry for those people, not because they're misusing their points but because they're immediately jumped on from all sides by people telling them they should buy resale.
Of course, they totally should buy resale. I think we all agree on that, at least.
Bill 
