What do you think will happen to resale prices in the next few years?

[disneynutz]

Of course DVC is going to start buying them back.

They can get something for $50 less then they are selling for at Retail.

What new resort do they have on WDW to sell after BLT is done? None?

DVC always has the option of calling a resale new again with zero restrictions and they could always offer the full 50 years on those contracts.

If they don't do this, then DVC is done for new buyers and what are they going to sell for the next 30 years? They can only build so many resorts at WDW.

They will renew their sales efforts at Kidani and increase the push for Aulani. The next new DVC resort will be the River Country site or The Grand Floridian, both are currently being studied.

The next off site resort will be in New York or Washington DC.

Bill

 

[JimMIA]

Of course DVC is going to start buying them back.

Betcha a beer they don't. They haven't in more than a year, during a period when they were obviously having difficulty with sales and have presumably been losing a lot of sales to resale.

They can get something for $50 less then they are selling for at Retail.

...which is a very high price, compared to what their new points cost them...literally pennies.

Plus, they get all those foreclosure points for nothing. Why would they ROFR BLT at $40 if they can get them for nothing?

What new resort do they have on WDW to sell after BLT is done? None?

SSR, AKV, and Aulani. And if you believe rumors, maybe Grand Floridian.

 

[bobbyg4eagle]

Plus, they get all those foreclosure points for nothing. Why would they ROFR BLT at $40 if they can get them for nothing?
QUOTE]

Plenty of foreclosure points to fill the coffers for awhile. Anyone know what Disneys max bid is for points? With the pipeline filled, I agree the ROFR is not necessary to procure points. I guess when foreclosures ease up and price gets low enough they will no longer waive. Until then, it should be a buyers market.
Personally I would hold onto points. They are going too cheap.

 

[KingRichard]

Betcha a beer they don't. They haven't in more than a year, during a period when they were obviously having difficulty with sales and have presumably been losing a lot of sales to resale.

...which is a very high price, compared to what their new points cost them...literally pennies.

Plus, they get all those foreclosure points for nothing. Why would they ROFR BLT at $40 if they can get them for nothing?

SSR, AKV, and Aulani. And if you believe rumors, maybe Grand Floridian.

So your saying it cost them what a few hundred to build a new building?

Pennies?

 

[JimMIA]

So your saying it cost them what a few hundred to build a new building?

Pennies?

Yes a building costs a lot to build, but look how many points are associated with an individual unit.

One of our statistical folks can give you the exact numbers, but it's an enormous number of points.

For example, the average nightly points cost for a BLT studio is about 20 points...obviously varying by view and season. Times 365 is 7300 points a year. If you multiply that by an average sales price of $100 per point (which is low), that's $730,000 for one studio.

And there are over 300 units in BLT and almost all of them are bigger than studios, and therefore more points to sell and greater economies of scale to build.

ROFR resales are just not a big profit item -- if they were, Disney would ROFR. Their money comes from the initial sale of points.

 

[tjkraz]

Bay Lake Tower reportedly cost about $80-100 million to construct and represents roughly 6.5 million points. With selling prices at $100-120 per point, you do the math...

700% markup is far, far, FAR more than they will ever get by using ROFR to reacquire points.

 

[JimMIA]

Bay Lake Tower reportedly cost about $80-100 million to construct and represents roughly 6.5 million points. With selling prices at $100-120 per point, you do the math...

And doing the math using Tim's figures ($100 million to build, 6.5 million points), I get a construction cost of $15.38 per point. WAY lower than what they would pay for ROFR points!

Obviously there are selling costs to consider, but that's true for ROFR points as well.

 

[mmjm]

I can't believe how low the prices are going, $45-55 per point some including banked pts, that's amazing. I don't think you will find a better time to buy than within the next 6-9 months. I need to find a way to buy another 100-200 points.

 

[mmjm]

I'm not sure if this was previously mentioned, if so I apologize, if not another reason Disney may not be in a hurry to buy pts thru the ROFR process is, if they buy/pickup the points I would assume they have to pay the annual dues for those points. If they don't have customers to by the ROFR points or think they can sell them quickly, Disney will be on the hook for the annual dues until the points are sold. In today's market that could be some time.

 

[jarestel]

A purchaser who buys resale and then subsequently resells is selling exactly the same contract they bought. A person who buys direct and then resells is selling something less. The new restrictions build in a guaranteed resale loss for the new buyer.

That's a great point! With all of the anxiety over the price of our "investments" falling due to the new restrictions, buying resale is now pretty much a no-brainer for anyone wishing to mitigate the impact.

 

[KPOP]

for anyone who has "enough" points for their use at the Disney resorts, then buying resale is the only way to go right now

 

[KingRichard]

The building cost $110 Million or more to build.


$20 per point is a lot more the pennies, but you already figured that out.

Max points they can sell is 5,618,595 and when they are gone then they will for sure start buying them back for $70-90 and then sell them for $130. Huge profits with no risk!

 

[lark]

Does anything actually lower over time?

Timeshares.

 

[lark]

Ultimately Disney can't let resale prices drop too low, unless they plan to continue to hammer benefits of resale points. But I don't think they have hit the floor yet or even close.

Theoretically, low resale prices can affect direct sales in a second way -- people not wanting to buy because they are worried about their investment. But this just doesn't seem to affect timeshares for some reason. Either people don't think they might like to resell some day or just dont trust resales.

 

[disneynutz]

Ultimately Disney can't let resale prices drop too low, unless they plan to continue to hammer benefits of resale points. But I don't think they have hit the floor yet or even close.

Theoretically, low resale prices can affect direct sales in a second way -- people not wanting to buy because they are worried about their investment. But this just doesn't seem to affect timeshares for some reason. Either people don't think they might like to resell some day or just dont trust resales.

And how many people bother to learn about time shares before they buy? I would guess that at least 60% plus have no clue what they are buying and most only know what they were told by their Guide.

Bill

 

[JimMIA]

Ultimately Disney can't let resale prices drop too low, unless they plan to continue to hammer benefits of resale points. But I don't think they have hit the floor yet or even close.

I think DVD is trying to figure that out now. They've laid off ROFR for more than a year, but I think it's too early to tell what effect, if any, that's had. Surely, the poor economy has hurt their sales worse than cheaper resale prices.

If they find they don't need to support resale prices with ROFR (and a recent BCV resale cleared ROFR at $66!), then prices will certainly go down further. I agree with you; I don't think we're anywhere near the bottom. I don't want to speculate on where that might be.

Theoretically, low resale prices can affect direct sales in a second way -- people not wanting to buy because they are worried about their investment.

I don't want to be uncharitable, but some people you just can't help. My advice to anyone doing purchase math on ANY timeshare purchase is to assume a resale price of $0. It's a purchase, NOT an investment.

Either people don't think they might like to resell some day or just dont trust resales.

But they have no problem buying their home through a realtor! Go figure. The truth is, the resale brokers are regulated by exactly the SAME people who regulate DVC.

 

[lark]

I think DVD is trying to figure that out now. They've laid off ROFR for more than a year, but I think it's too early to tell what effect, if any, that's had. Surely, the poor economy has hurt their sales worse than cheaper resale prices.

I do think we have some indication -- the decision to reduce benefits for resales was, I would think, plainly a reaction to the dropping resale market. It can't be a coincidence that it was tied to lower ROFR activity. They needed to find another way to keep selling direct, despite not artificially maintaining resale prices with ROFR. Of course, now they are doubling down -- by taking away benefits for resale points, they drive down resale prices even farther. They have the ability to counteract this somewhat with longer right to use periods for direct, but at the end of the day, if they want to keep the money presses going by building new DVC resorts, they can't let resales drop too much more, unless they have another trick up their sleeves, which I suspect they do. We'll see.

Idon't want to be uncharitable, but some people you just can't help. My advice to anyone doing purchase math on ANY timeshare purchase is to assume a resale price of $0. It's a purchase, NOT an investment.

Even worse, because you're obligated for dues, which can escalate outside your control. Many people can't give away their timeshares right now. Not really true with DVC, and the rental market has remained pretty robust, so that one can always do better than dues with a little planning and effort. Still, I think one of the things DVC has always had in its favor justifying some of the highest direct sales rates in the business is resale and rental ability. Sure, these things don't matter for 80 percent of the buyers, but for the educated 20 percent, guides will often tout sanctioned renting and resale prices to close a sale. It's a balance, but disney has to be mindful of even the educated purchaser, even if their bread and butter is the drop in customer buzzing from getting great pictures at a character meal.

 

[nansan]

It is unforunate that they are dropping now!

 

[erikawolf2004]

It is unforunate that they are dropping now!

Well that depends if you are a buyer or a seller. As a buyer I think it is great, it is what we figured would happen after 3/20 and why we waited.

 

[Anthony1971]

Well that depends if you are a buyer or a seller. As a buyer I think it is great, it is what we figured would happen after 3/20 and why we waited.

This may be short term as you had a huge influx in buyers some of which were likely pushed to buy earlier.

Also house prices are STILL going down (although there was a previous bottom ) as so will timeshares

Once Real estate recovers likely timeshares will follow

But as said this is not an investment in anything but a vacation and if you are trying to time a bottom or top (at some point maybe) you are not buying DVC for what it is and stand to suffer a huge disappointment.