What happens when....

[mjc2003]

I wonder if DVC will become an issue for the resorts as they get closer to expiration. With prices depreciation at an alarming rate (just saw BCV contract in the $60?!!!), they will be selling for a few dollars a point 5 years or so before they expire. DVC is unique in that it's attached to one of the top tourist destinations in the world. People pay a fortune to stay deluxe, it's going to very interesting to see "prospectors" create a whole business out of taking over almost-expired contracts for a few bucks and turning a nice profit off cash reservations.

Right now I could rent out my points and basically cover 2 years of dues, maybe a bit more. The reason I can't really turn a profit is the amount of time it will take for me to recoup my initial investment. But if the ratios stay the same and you can basically rent a reservation for twice the cost of dues in 25 years as is the case today, then if I can get the contract for basically nothing it would be a compelling, almost easy way to make good money.

 

[patsal]

Is $60 that low for a resort that I paid $72 for when I bought? I don't think that is a shocking number.

 

[tgropp]

BCV @ approx $60/point. I am waiting on a 50 point BCV contract to pass ROFRand I paid $81...it also had 50 2011 points. I would presume that this contract had the points stripped. Disney seems to be buying BCV points att the moment.

 

[cdmickey]

I bought for value received; wasn't in it for a profit. If I go to the end (and never sell); I'll feel, 'value received'.

 

[Tamar]

When prices get really low, perhaps ROFR comes back into play and the contracts are there resold with extensions. For the 2042 contracts, that might start happening sooner rather than later.

 

[sweetdana]

Wow I cannot believe the price of BC... I went to 2 major resale sites. That is very low IMO.

 

[bumbershoot]

I bought for value received; wasn't in it for a profit. If I go to the end (and never sell); I'll feel, 'value received'.

YES.


Even if someone else can buy Bay Lake for less than we are paying for it, I don't feel that MY membership has depreciated; it does nothing to me. I am getting the same benefits that I signed up for; prepaid (well, we're financing, so right now it's not PREpaid, LOL) vacations. I really do not care what it's valued at right now, since I bought it for vacations, NOT as an investment.

 

[jkevinmcg]

I bought for value received; wasn't in it for a profit. If I go to the end (and never sell); I'll feel, 'value received'.

Agreed!

 

[mjc2003]

Is $60 that low for a resort that I paid $72 for when I bought? I don't think that is a shocking number.

Well I guess it's about perspective. In the last year, BCV resale contracts have depreciated almost 20% from the low $80's to $mid $60's. So I am looking at the macro vs your micro angle. But my point isn't about the cost of BCV today, I was talking down the road.

I bought for value received; wasn't in it for a profit. If I go to the end (and never sell); I'll feel, 'value received'.

People get very defensive when they think the value of purchasing DVC is being questioned. I am not talking about why anybody bought, or if the individual buyer was in it for a profit. I am talking about an entirely different issue, namely the future potential for conflict between DVC and Disney cash reservations.

When prices get really low, perhaps ROFR comes back into play and the contracts are there resold with extensions. For the 2042 contracts, that might start happening sooner rather than later.

Bingo. DVC has almost no choice but to keep extending, otherwise this scenario that I am referencing will become real. They won't exercise ROFR without extensions as we get closer to expiration dates b/c there won't be a primary market to resell it to, unless of course they extend.

Wow I cannot believe the price of BC... I went to 2 major resale sites. That is very low IMO.

I agree.

YES.


Even if someone else can buy Bay Lake for less than we are paying for it, I don't feel that MY membership has depreciated; it does nothing to me. I am getting the same benefits that I signed up for; prepaid (well, we're financing, so right now it's not PREpaid, LOL) vacations. I really do not care what it's valued at right now, since I bought it for vacations, NOT as an investment.

Again, I agree wholeheartedly but this is not really the point. I think most people who own for an extended period of time are going to feel like they got tremendous value. I'm not talking about the individual, nor am I talking about value. I am simply questioning how Disney will handle the issue of people "buying" up resale contracts for basically nothing just a few years before expiration, and selling cash reservations for very cheap vs direct deluxe reservations.

 

[Greysword]

It is my contention that DVD will have a threshold in mind, and if points drop past a certain level (single digits? definitely $1), they will do massive RoFR. This is due to the amount of money that will be taken from the other parts of the resort, which your example is a good one (even if this would be considered a rental business and DVC will likely prevent the points from being used).

DVC could wait until expiration date to get the property back, or they could simply buy up the low priced points a decade earlier and get on with their new project.

 

[Dean]

I sincerely doubt DVC will be doing much ROFR late in the game. First, to have ROFR, you have to have a valid contract in place. IF DVC were scooping them all up for pennies, no one would bid on them. This would represent a major shift in what they do as a business. They couldn't resell them for that short a term, all they could do would be to rent them out and they'd be lucky to get back the dues. I also don't expect a direct buy back program but that would make more sense. I think it's almost 100% we won't see DVC or DVD or anyone else buying late just to make a profit. What you might see is someone trying to squeeze a couple of years out with cheap vacations but I don't think that'll be very wide spread. Remember, by the time you count that the last year is a throw away (not enough rooms for all the points), the banking will be stopped by necessity (so no loaded contracts) and then add in the lead time to close and then get a reservation (likely much competition late) to do so one would have to be 4-5 years out, not 2-3.

On one hand I could see them buying back for places like OKW and then closing sections to get an early start if they decide to rehab and resell or use the land for another resort. However, I'm thinking that the deeded "unit" process may make this approach unworkable because I don't think they can permanently close a unit that has a current owner unless it falls under the POS rules for removal from the club. I guess they could have a vote of the general membership but I don't see this happening. This is one of the reasons I believe they'll wish they hadn't gone the deed route, which they did not have to do, all they had to do was hold it in a trust.

 

[Dean]

IMO BCV was always over hyped and over valued compared to BWV.

 

[everythingdisneyfan1]

I bought for value received; wasn't in it for a profit. If I go to the end (and never sell); I'll feel, 'value received'.

I completely agree. We don't want to be ignorant with our purchase; however, we LOVE Disney and would like to vacation through Disney for the rest of our adult lives. It's not about how much I paid vs. how much others are paying, but it's the fact that I can bring my family to Disney resorts every year for a small fraction of the price those rooms normally cost retail. Guaranteed trips for the rest of my life while memories are made year after year? You can't add a price tag to that kind of value.

 

[McLoki]

If what you are saying is true - wouldn't the resale market just go away???? if, as an owner, I had points that had no value to sell, but I could rent for a decent profit, why would I sell them???

If the senario you are talking about plays out - why would I, as the current owner, not just rent the points myself for the profit rather than sell the points for $5 so someone else could rent them for $1,000????

I am really quite confused by this thread.....

 

[mjc2003]

If what you are saying is true - wouldn't the resale market just go away???? if, as an owner, I had points that had no value to sell, but I could rent for a decent profit, why would I sell them???

If the senario you are talking about plays out - why would I, as the current owner, not just rent the points myself for the profit rather than sell the points for $5 so someone else could rent them for $1,000????

I am really quite confused by this thread.....

There are a lot of reasons why somebody might give up a contract 5 years before expiration. First, maybe somebody doesn't care anymore and just wants to get away from the dues. Maybe somebody could get a few thousand bucks, get away from the payments and doesn't want to deal with making back an annualized profit on something that's already paid for itself.

That doesn't delve into the obvious, which is that most DVC buyers will be 30 years older and not everybody plans on deeding, not everybody has kids, and not everybody wants to spend retirement with thousands of dollars in DVC dues.

It's not that confusing. It's just conjecture.

 

[arthur06]

IMO BCV was always over hyped and over valued compared to BWV.

THIS!

 

[gdrj]

Well I guess it's about perspective. In the last year, BCV resale contracts have depreciated almost 20% from the low $80's to $mid $60's. So I am looking at the macro vs your micro angle. But my point isn't about the cost of BCV today, I was talking down the road.

I am not surprised with "depreciation" in any type of real estate. As a tome share beside the normal depreciation which eventually should be down to $0.00 , the economy definitely has an impact on both sides, people who have financial distress that must unload and less people in the buying market. Add to that the over abundance of available time share in FL.

 

[Mickey'sApprentice]

IMO BCV was always over hyped and over valued compared to BWV.

 

[mjc2003]

IMO BCV was always over hyped and over valued compared to BWV.

Different strokes for different folks. We enjoyed our stay at BWV, and the resort rooms are quite similar. However, walking 15 minutes to get to the lobby was not of interest, and the pool area would inspire Stephen King to come up with a best seller, with images of that freaky clown slowly chomping down on children exiting the slide.
With small children, the pools are a huge factor. No zero entry area for us, with small kids, is a problem. The BWV pool is, frankly, ordinary to the point of kitschy, and we didn't like it. I know I'm not alone in this. Juxtapose that with a world class 3 acre pool facility at BCV that is so popular that they have to guard the entrance, and I think you have your difference in value. It's also hard to value the 2-3 days we can spend at the pool relaxing and feeling like we're on vacation while at BCV; when we were at BWV, after a few hours by the pool my girls were asking "what are we going to do today". We certainly couldn't spend 2-3 days there. Again, value is in the eye of the beholder.
We also find the BCV villas quieter and more accessible b/c of the smaller size. After pushing a stroller for 20 minutes through the BWV hallways, I needed a break.
Both are nice resorts. Each holds different value for different people, so I understand these are just varying opinions.

I am not surprised with "depreciation" in any type of real estate. As a tome share beside the normal depreciation which eventually should be down to $0.00 , the economy definitely has an impact on both sides, people who have financial distress that must unload and less people in the buying market. Add to that the over abundance of available time share in FL.

But DVC is different than other timeshares in that it's attached to one of the premiere vacation destinations in the world, and it has an expiration. My point with this post was to sort of marry those two concepts; there always will be demand for rooms, but the members contracts will devalue rapidly over the last few years. So will members who bought at 40 and are now 70 with grown up kids who don't care maybe for WDW, and who are budgeted for retirement, hold onto the thousands of dollars in yearly MF's for the last 5-10 years or will they unload to get out from under their contracts and salvage $5000?

I certainly don't know what will happen. I do think this will present an interesting dilemma at some point. Points will be had for cheap during the last 5-10 years of the life of these contracts, and points equal rooms, so I was really just curious if this issue could lead to a conflict between DVD and central cash reservations. I guess most think not, but I do think this will make them have to consider extensions. I am sure they have considered this issue, I guess we have plenty of time to wait and see what they come up with.

 

[Granny]

mjc2003...interesting topic as are all "end of days" threads about 2042.

I also don't expect a direct buy back program but that would make more sense.

A buy back program was what I thought of. But then I was thinking that OKW has a split "end date" with the extensions they sold. I would think that might confuse things a bit.

My guess is that the current DVD management is hoping they will be long in retirement before this has to be addressed. Or that some imagineer will come up with a creative way to transition the DVC resorts to another life.