So whats the conventional wisdom

[bobbiwoz]

I just asked Wil, my DH, and he said OCC has only posted documents through March 25. wdrl has collected the data through March 22nd but he won't update the chart until everything is complete on the OCC website and he verifies his figures. He said DVD has done 26 ROFRs through 03/22 and it is spread over OKW, SSR, BLT, VWL and BCV -- none so far for BWV.

Interesting, thanks for replying.

 

[ELMC]

I disagree on that statement. It is a buyers market, not a sellers market. The prices on the resale market except for BLT, VGC and Aulani are at least half the price of a DVC direct purchase. Sure some contracts are ROFRd, but that is less than than you would think. Only OKW has had a higher percentage (28.6%) of ROFRs and the rest are less than than 10% with BCV and BWV had no ROFRs in January or February if 2013. See wdrl's thread, Percent of Resales Passing ROFR thread.

With all due respect, I don't think you are focusing enough on the current marketplace. The data in the thread you referenced is over a month old, and has a one to two month lag time built in. Your statement about there being no BWV ROFR in January and February is incorrect. If you look at the boards you will see that there has been a frenzy of ROFR activity at BWV, with very few contracts passing.

The resale market is significantly different from what has existed for the past year, and the changes have happened quickly. Supply at many resorts is at a 12 month low, there are more stripped contracts listed now than at any time in the past year, and ROFR hysteria has people bidding $3-5 ABOVE asking price which is leading to an escalation in prices. Add on top of that the fact that ROFR activity is the highest it's been in years and I stand by my statement that this is not a good time to buy. That being said, I still feel that buying resale is better than buying direct, and to your point the savings are still there. Just know that you're not going to get anywhere near as good a deal as you would have six months ago.

 

[crisi]

With all due respect, I don't think you are focusing enough on the current marketplace. The data in the thread you referenced is over a month old, and has a one to two month lag time built in. Your statement about there being no BWV ROFR in January and February is incorrect. If you look at the boards you will see that there has been a frenzy of ROFR activity at BWV, with very few contracts passing.

The resale market is significantly different from what has existed for the past year, and the changes have happened quickly. Supply at many resorts is at a 12 month low, there are more stripped contracts listed now than at any time in the past year, and ROFR hysteria has people bidding $3-5 ABOVE asking price which is leading to an escalation in prices. Add on top of that the fact that ROFR activity is the highest it's been in years and I stand by my statement that this is not a good time to buy. That being said, I still feel that buying resale is better than buying direct, and to your point the savings are still there. Just know that you're not going to get anywhere near as good a deal as you would have six months ago.

I don't think you'll get as good a deal as you would have six months ago (or a year ago) until the market crashes again. Contract life will go down, which will bring down prices - but for years remaining, the last few years were a perfect storm for resale buyers.

1) Disney didn't choose to invest the cash they had on ROFR. Like most of corporate America, they were really hesitant to tie up any money in capital, which is what buying contracts is.

2) A lot of people discovered that with the downturn in the economy, DVC didn't fit their budget and had to sell, creating more supply than before.

3) But less demand, because people with jobs weren't certain they'd keep them, real income declined as people didn't get raises (but park ticket costs continued to go up), and buying a timeshare, even for those in secure jobs, seemed foolish to a lot of people.

4) Disney had a lot of supply on sold out resort contracts simply through foreclosure. People walked away from their contracts.

Now, we are getting a lift to the economy. Disney feels they can invest in capital again - they don't have a lot of foreclosure inventory. The people who couldn't afford DVC have been washed out - most of the people left are pretty secure except for "ordinary" life changes. And people are starting to buy things again.

There have been better times to buy resale, including six months ago. But now is probably better than six months from now. Within the next year it will likely restabalize - probably where it was before 2008 - where you could save a little money going resale, but not a lot.

 

[chalee94]

There have been better times to buy resale, including six months ago. But now is probably better than six months from now. Within the next year it will likely restabalize - probably where it was before 2008 - where you could save a little money going resale, but not a lot.

if resale values really go back to being around 80% of direct prices, i might be selling...

not disagreeing with most of your analysis. i just find it hard to believe that demand is really that strong at direct prices. time will tell, i guess...

 

[bighoo93]

not disagreeing with most of your analysis. i just find it hard to believe that demand is really that strong at direct prices. time will tell, i guess...

Regarding the demand for direct-purchased DVC points, DVD recently raised prices across the board. It is possible that the people running the business are complete and utter morons, but that is not the safe bet. Most likely, the people who are in the best position to know the business and its current economics have judged that the demand is quite strong. Raising prices rarely indicates weak demand (though there are interesting exceptions...).

 

[Sandisw]

I just asked Wil, my DH, and he said OCC has only posted documents through March 25. wdrl has collected the data through March 22nd but he won't update the chart until everything is complete on the OCC website and he verifies his figures. He said DVD has done 26 ROFRs through 03/22 and it is spread over OKW, SSR, BLT, VWL and BCV -- none so far for BWV.

I have read threads just in the past few days where BWV is getting taken so I am sure when updates happen, you are going to see different numbers.

Just in terms of my own experience and these boards, ROFR is certainly showing up a lot more than it had been these past 4 years...I agree it could be the upturn in the economy and Disney going back to it's typical pattern, but for so long, it seemed pretty much everything was getting through ROFR...now, it seems you see more that don't, then do, with our DIS community.

 

[ELMC]

if resale values really go back to being around 80% of direct prices, i might be selling...

not disagreeing with most of your analysis. i just find it hard to believe that demand is really that strong at direct prices. time will tell, i guess...

I agree, and couldn't believe how many threads there were right after the webcast where people were looking to buy now and get ahead of the price increase. It was a shockingly brilliant move. The only problem is that soon enough that sizzle will wear off. The good news is that they can recreate the same situation with another pending price increase.

 

[ELMC]

...Add on top of that the fact that ROFR activity is the highest it's been in years...

Well it appears as if I just reversed jinxed myself, as I finally got a contract through ROFR (after having four ROFR'ed in February and March). Thus proving once again that when it comes to ROFR, we're all just guessing.

 

[Sandisw]

I agree, and couldn't believe how many threads there were right after the webcast where people were looking to buy now and get ahead of the price increase. It was a shockingly brilliant move. The only problem is that soon enough that sizzle will wear off. The good news is that they can recreate the same situation with another pending price increase.

I know...think about it..those on wait lists are getting some of the "classic" resorts around $115...ROFR is happening in the 60's so those passing may need to be up in the 70's, could start seeing $80's.

Those wanting smaller contracts now find that the difference, when considering closing, is not enough to make going direct so hard to swallow...

Glad though that you got one to go through!!! Its nice to hear some good news...I feel fortunate that I made it through with my BLT contract just last month!!!

 

[chalee94]

Regarding the demand for direct-purchased DVC points, DVD recently raised prices across the board. It is possible that the people running the business are complete and utter morons, but that is not the safe bet. Most likely, the people who are in the best position to know the business and its current economics have judged that the demand is quite strong. Raising prices rarely indicates weak demand (though there are interesting exceptions...).

there are 2 issues though:

1) there is demand at the higher prices for direct sales for primarily add-ons, as has been the case for some time. DVC can pick up inventory primarily through foreclosures. ROFR is limited to a nuisance activity to drive some traffic to direct sales.

2) DVC really intends to ROFR contracts like fiends going forward and use that as a primary source of inventory for direct sales. maybe demand really is strong enough for them to resell 2042 resorts and OKW on a regular basis and that will become DVC's SOP.

but i'm on the "i wanna see it before i believe it" list.

 

[DannysMom]

I keep seeing the resale value of "80% of direct cost." Which in recent years the gap has been much wider, making the case for resale a much easier sell, and direct purchase a much harder sell.

Perhaps DVC decided that the point at which most buyers would go retail over resale, is when the gap is at approximately 20% or less. So maybe, just perhaps, they are attempting to drive UP resale prices (through ROFR activity) to narrow the gap. That would certainly benefit current owners, if they are ever forced to sell.

Sent from my iPad using DISBoards App, please excuse any typos or autocorrects!

 

[JimMIA]

My response was just to say right now that data is not there even the most knowledgeable broker has no idea.

There's always a measure of guesswork, but your experience actually proved my point.

You'll note that your broker WAS following the ROFR activity and was very current. Not all brokers would have had that info at their fingertips -- heck, some wouldn't even have taken your call!

 

[crisi]

DVD can also maintain or even lower the price of classic resorts to create the optimal price differential. They have a lot of control over the situation that ordinary mortals don't have to drive direct sales.

 

[Dean]

Well it appears as if I just reversed jinxed myself, as I finally got a contract through ROFR (after having four ROFR'ed in February and March). Thus proving once again that when it comes to ROFR, we're all just guessing.

And that is the way DVC has historically used ROFR, to keep you guessing, not to establish and easily discernible breakpoint.

 

[ELMC]

I keep seeing the resale value of "80% of direct cost." Which in recent years the gap has been much wider, making the case for resale a much easier sell, and direct purchase a much harder sell.

Perhaps DVC decided that the point at which most buyers would go retail over resale, is when the gap is at approximately 20% or less. So maybe, just perhaps, they are attempting to drive UP resale prices (through ROFR activity) to narrow the gap. That would certainly benefit current owners, if they are ever forced to sell.

Sent from my iPad using DISBoards App, please excuse any typos or autocorrects!

This is a good point. But even if resale prices get to that point, I don't think the question is "resale vs. direct", I think the question is "buy DVC or not?" It would be a mistake to look at the resale prices and conclude that it is not worth the hassle to only save 20% and therefore buy direct without first engaging in an analysis to determine if DVC is actually worth it vs. the other options.

And that is the way DVC has historically used ROFR, to keep you guessing, not to establish and easily discernible breakpoint.

Well it's working, because I went from stalking the resale boards and making a significant number of offers to sitting on the sidelines. I'm slightly more optimistic after having this contract pass, but I have had four in a row get taken this year, so it's taking the wind out of my sails a bit.

 

[JimMIA]

...I don't think the question is "resale vs. direct", I think the question is "buy DVC or not?" It would be a mistake to look at the resale prices and conclude that it is not worth the hassle to only save 20% and therefore buy direct without first engaging in an analysis to determine if DVC is actually worth it vs. the other options.

That really is the critical question, and unfortunately not one which gets asked as much as it should.

People get blinded -- first by the pixie dust, and later trying to figure out the minutiae, without first having answered the two most basic questions:

1. Do I want to own a TIMESHARE?
2. Is DVC the best timeshare for my family's needs, or would another alternative be better?

 

[dbs1228]

There's always a measure of guesswork, but your experience actually proved my point.

You'll note that your broker WAS following the ROFR activity and was very current. Not all brokers would have had that info at their fingertips -- heck, some wouldn't even have taken your call!

Very true but heck it still is not getting me a contract!

 

[Dean]

That really is the critical question, and unfortunately not one which gets asked as much as it should.

People get blinded -- first by the pixie dust, and later trying to figure out the minutiae, without first having answered the two most basic questions:

1. Do I want to own a TIMESHARE?
2. Is DVC the best timeshare for my family's needs, or would another alternative be better?

Unfortunately a large % of DVC buyers assume DVC is the best option without getting enough info to make a truly informed decision. For many not only is a non DVC timeshare the cheapest option, it's also the best single option.

 

[JimMIA]

Unfortunately a large % of DVC buyers assume DVC is the best option without getting enough info to make a truly informed decision. For many not only is a non DVC timeshare the cheapest option, it's also the best single option.

I'll go even further than that. For many, not owning ANY timeshare is a better option.

Timeshares are great for many families, but they're not the same as picking up the phone or going on the internet and making a hotel reservation. There is a significant learning curve with any timeshare system just to get started, and to get the full benefit one really must master several systems -- at a minimum, your system and the exchange system your company uses.

And timesharing involves a good deal of planning. I have a friend who is going to Washington DC this summer. When I talked to her yesterday, she asked, "Are you going with us?" We haven't ever vacationed with them, and haven't even mentioned doing so (that I know of -- the DWs may have been conspiring). I asked when they were going, and they have a range of dates in June/early July but haven't settled on exact dates.

If we'd planned ahead, I probably could have gotten us a great deal on lodging. But with six of us (DWs X 2, DD/BFFs X 2, DHs X 2 tagging along for the ride and paying the bills ), that is probably an impossibility now. If the discussion gets more serious, I'll check the various RCI options and maybe something acceptable will pop up.

Our friends are great people, schoolteachers with known schedules a year or more in advance, like to travel and have plenty of money, but they are not planners. Timesharing would be a big mistake for them.

 

[johde]

Another thing to consider in Disney's increased ROFR activity is the availability of "New" contracts in the comming months. They are currently activly selling AKV and Aulani. If AKV sells out quickly Disney would probably like to have onsite options to sell until the Grand Floridian Villas starts selling. On top of that, if the Grand Floridian Villas start selling with an equally grand price tag, Disney may want to have an increased inventory of classic resorts to offer as alternatives at a lower price.