Where do you think DVC resale prices are headed?

[icc2515]

No because everyone splits the costs all the time. Disney has to pay based on the points they hold.

I am pretty sure that I have read on these forums that Disney does not pay any MF fee on the points that they own. Instead they agreed to pay for any shortfalls in refurbs that arise.

I got that info from the thread below.

https://www.disboards.com/threads/covid-19-points-fate.3798010/

 

[sethschroeder]

I am pretty sure that I have read on these forums that Disney does not pay any MF fee on the points that they own. Instead they agreed to pay for any shortfalls in refurbs that arise.

I got that info from the thread below.

https://www.disboards.com/threads/covid-19-points-fate.3798010/

Thats talking about declared but then unsold points. Not the baseline points that Disney is required to own and also not the points they get through ROFR.

 

[icc2515]

Thats talking about declared but then unsold points. Not the baseline points that Disney is required to own and also not the points they get through ROFR.

Thanks for the clarification.

 

[MinnieB]

We all were probably saying that after the 2008 bailouts and it never came....,

The 2008 “bailouts” were generally in the form of loans, paid back in full with interest. One can hope this time plays out in the same way. However, we don’t yet know how deeply this will impact people or what the recovery will look like. It is difficult to know if comparisons to prior events will prove relevant.

 

[ELMC]

You all are very optimistic. That's fantastic! I'm not sure how it exactly works out though. We have a country that has decided to put the economy in a coma until they feel comfortable everything is under control, with no timeframe. This is one of the most discretionary items that you could possibly own, with dues that go up every year beyond anyone's control. I would have to imagine theme parks, with thousands of people piled on top of one another, and countless surfaces, will be one of the last things to re-open. I hate to say it, but I don't think there is a normal to go back to, and I have no idea how Disney parks fit into the "new normal". Disney has pushed the envelope to this point on the back of one of the greatest bull markets of all time. Now what happens with the greatest economic downturn in a 100 years is anyone's guess. And if you question that last statement, just look at jobless claims for the last couple of weeks, and imagine that at least 2 states already have shut down the economy until June 15th. Help me see past this. Give me reasons to think otherwise. Thanks in advance.

I can't. I think you're right. That said...

Ok. This is embarrassing, but for others reading this at this important time, I will say, I have made over $200,000 and over $250,000 for most of the last 10 years. I backed out of our DVC resale contract offer that I made at a very good price, and have cut off my cable service, my lawn service, and my maid service in the last 30 days. I have nothing left but my mortgage, and a beach house I'm stuck with in Florida. We are no longer ordering out and we are rationing food. If you really are going along with life as normal at this point, I hope you are right.

You should do what you feel most comfortable with, but there is a chance you might be overcorrecting. But that's ok, because if things become as bad as you think they will then you're prepared, and if not then you're ahead.

IMO

Unemployment claims vastly over represent true unemployment, as many employers are furloughing their employees so they can get unemployment immediately from the government.

Stimulus bill essentially gives small businesses 2 months worth grant of payroll and rent support. There small businesses account for around 40% of US workforce. For large businesses, they get separate grants and loans to keep paying people. If 2 months of support is not enough, new stimulus bill will be passed, because it’s an election year and nobody wants to be seen in the way of obstructing people getting paid. This is basically a case of the entire economy being too big to fail.

This is not a structural issue in the economy. It’s a new disease that people currently don’t have no immunity to. In the short term, rapid testing has already been invented, and in the process of scaling up manufacturing. Once we have that, we can lift quarantine, open up the economy, and use rapid testing to pinpoint hotspots for response. Longer term, there is a well developed vaccine development process so it’s just a matter of time.

I agree that Disney vacation is discretionary. Many people’s lives will be disrupted, some in catastrophic ways. Prices will certainly drop. But this is not 2008 where It’s a systemic issue of people who can’t afford to buy houses stretching into them and get wiped out - in that situation people have to fire sell assets to try to keep their home. In this case, I think we are looking at a couple months of disruption in cash flow, and the US government is at the very least providing a 2 month cushion In cash flow. People’s monthly dues are already paid until 2021. If you need cash immediately, it will take two months to get the cash from a DVC sale even if it sells immediately. Therefore I think prices will drop but I don’t think there will be a fire sale.

This is definitely one narrative. But here's another:

Stimulus checks don't arrive in time or are not enough (spoiler alert: they're not) or the lockdown lasts longer than we were initially told and businesses can't hang on. One by one they shutter their doors, economically devastating not only the owners but the employees who have nowhere else to turn. We open the economy back up and assuming everyone isn't terrified by that point, it starts to ramp up right up until there is a resurgence of the virus and we have to do it all over again. The vaccine is arguably still 12-18 months away, if that. At the same time we have to deal with the aftermath of the Fed basically printing trillions of dollars and the impacts that it has on the economy, which I'm guessing won't be good. So take all this and tell me, if this is happening to you and you own a $20,000 timeshare, don't you think you'd sell it?

Point is, I'm not saying you're predictions are going to be correct and I'm not saying that mine are. But they're both on the list of possible outcomes, and it would be unwise to dismiss either possibility. Bringing it back to the question at hand...this will lead to utter decimation of the resale value of DVC contracts.

Only thing might happen is a slight reduction because of no daily costs of labor and upkeep during this time.

I think it might be more than slight. IIRC, labor is the most significant line item in our DVC dues. Not only are housekeepers being furloughed but so are bell services, front desk, lifeguards, etc. etc. etc. I think there is going to be a huge line item cost savings there. I have no idea how it will be handled, passed through or not, or what impact it will have on dues next year.

 

[ELMC]

The 2008 “bailouts” were generally in the form of loans, paid back in full with interest. One can hope this time plays out in the same way. However, we don’t yet know how deeply this will impact people or what the recovery will look like. It is difficult to know if comparisons to prior events will prove relevant.

Small businesses are being offered loans that are 2.5x payroll (up to $10,000,000) and however much of that amount you can spend in 8 weeks is forgiven. Simply put, there is no payback this time, it's a giveaway. The remainder is payable after 12 months, but what do you think the default rate is going to be on those loans? Not sure about large businesses but you can bet there are payoffs and not just loans. This is not a fix by any means, it's triage. And it's simultaneously woefully inadequate and yet large enough to wreak havoc on the economy. I could be wrong here, but I think we are in for a world of hurt and a lot of people don't see it. But they're starting to. Oh yeah, on topic, DVC resale prices down.

 

[MinnieB]

Oh yeah, on topic, DVC resale prices down.

Agree. This is fully a question of magnitude, not direction.

 

[poofyo101]

You were the last contract to get ROFRed and that was almost three weeks ago and probably further back than that if you were going through Fidelity. The decision to exercise ROFR was most certainly made before they knew they were shutting down everything and they had no income coming in from theaters and ad revenue disappeared from their media properties.

I might have been the last one but almost every other contract that has gone through wasn't going to get bought back anyway based upon the variables we knew prior.

 

[bookwormde]

4/4 Update

New resale contract counts were at about 25% of average

 

[TheGecko]

We are still a ways off on pricing for DVC. Back in 2014/2015 it was common to get AKL in the high 70s and low 80s. OKW was in the 60s-70s depending on size of contract. I see it going there again and soon.

DVC, Disney and the Airlines were in pure bubble mode. The prices on flights, tickets, and points increase greatly outpaced inflation by a tune of close to 2X-3X. I was actually shocked when I saw what I was paying for my trip this June versus 6 years ago. The same accommodations for a family of 5 (room, tickets, quick service meal plan) is running about 2K more per trip. The flights were running about 1K more (close to doubled) when I bought in January. Of course the airline tickets have cratered now which was is my fault for buying too soon.

This was not a sustainable model if an econmic slow down occured. Well it is here so let's see where it all lands.

 

[lovethesun12]

We are still a ways off on pricing for DVC. Back in 2014/2015 it was common to get AKL in the high 70s and low 80s. OKW was in the 60s-70s depending on size of contract. I see it going there again and soon.

DVC, Disney and the Airlines were in pure bubble mode. The prices on flights, tickets, and points increase greatly outpaced inflation by a tune of close to 2X-3X. I was actually shocked when I saw what I was paying for my trip this June versus 6 years ago. The same accommodations for a family of 5 (room, tickets, quick service meal plan) is running about 2K more per trip. The flights were running about 1K more (close to doubled) when I bought in January. Of course the airline tickets have cratered now which was is my fault for buying too soon.

This was not a sustainable model if an econmic slow down occured. Well it is here so let's see where it all lands.

You worded this perfectly in my opinion. While our budget for trips has changed very little (we use a % of income, which obviously never goes up, lol) what we are able to get for our budget has changed significantly. We use to go during Easter (Which is still what we prefer) but got completely priced out on both flights and resort. We then switched to summer. We still make changes every year. It has meant juggling our purchases - cutting down on nights, split stays, etc. Also, with increasing crowds, we decided that things like dessert parties are important so have eliminated the dining plan or an extra night to pay for that.

We also considered DVC in the past, but it would have taken almost a decade to break even (I don't price based on rack rate I price based on sales I've been getting) and there were so many unknowns with pricing (ex - current pandemic would never have been considered) we decided against it and I'm glad we did.

In addition, if prices dropped 50% tomorrow, I would question the decision even more now because there is just so much uncertainty and locked in fees that don't exist if I invested the money instead. I always considered the DVC rental market a crutch if we bought but what is going to happen to that option now? How secure are our jobs? Will I feel comfortable travelling before a vaccine? I will still need to lock into $1000's of dollars of dues payments annually plus the upfront cost and thus lock my vacation into Disney for decades.

 

[Galun]

Small businesses are being offered loans that are 2.5x payroll (up to $10,000,000) and however much of that amount you can spend in 8 weeks is forgiven. Simply put, there is no payback this time, it's a giveaway. The remainder is payable after 12 months, but what do you think the default rate is going to be on those loans? Not sure about large businesses but you can bet there are payoffs and not just loans. This is not a fix by any means, it's triage. And it's simultaneously woefully inadequate and yet large enough to wreak havoc on the economy. I could be wrong here, but I think we are in for a world of hurt and a lot of people don't see it. But they're starting to. Oh yeah, on topic, DVC resale prices down.

Even severely affected Asian countries like South Korea and Japan don’t need to shut down their economies because they learned from SARS in 2003, and developed an infrastructure for rapid testing and detailed tracking. Even right now they can control the spread of the virus with targeted quarantine. What the world needs is an antibody test at scale. Then you know who is already immune and can get back to normal. Those tests have already been invented and undergoing validation.

We started way behind, but I am confident that the wealthiest country in the world can figure it out in two months. While we are establishing this testing infrastructure, we are also building hospital surge capacity. Point is I am cautiously optimistic about us handling the second wave.

as for massive unemployment, I think and hope that our country, and the world for that matter, start reevaluating having their manufacturing being dependent on an intransparent country like China . I think this is the wake up call and a lot of manufacturing will move back to the us.

I agree prices will certainly go down. I just don’t think it will be fire sale. Like I said, I picked up two contracts at 2015 prices. Just ignore the market price, it’s not a true reflection on market clearing p

 

[sethschroeder]

I will still need to lock into $1000's of dollars of dues payments annually plus the upfront cost and thus lock my vacation into Disney for decades.

It's 1000s only if you have a ton of points. Most people don't have 300+ points and very likely sit in the 100-200 point range which even at riveria puts you at $831 to $1662 for the MFs.

We also considered DVC in the past, but it would have taken almost a decade to break even

Everyone does their math differently but did you account for the increases you saw on rooms over time?

You even said you were priced out of Easter. Well for DVC that really wouldn't be a thing because you have points locked in that have value and while there are some changes in point requirements it's nothing crazy.

So yes you are happy to not have bought that's fine but I thought it was important to look at the whole picture.

I also have zero issues saying if you are that worried you probably could sell the resale contract bought 2-3 years ago and breakeven possibly even coming out ahead.

I have a 150 point contract I am keeping, looking at a direct contract possibly this next year, and just sold off a 30 + 50 point contracts I bought back in October/November for a profit.

So no one should be losing their shirt if they are proactive and selling now. If it came to it I would be renting my points to cover MFs.

 

[E2ME2]

Even severely affected Asian countries like South Korea and Japan don’t need to shut down their economies because they learned from SARS in 2003, and developed an infrastructure for rapid testing and detailed tracking. Even right now they can control the spread of the virus with targeted quarantine. What the world needs is an antibody test at scale. Then you know who is already immune and can get back to normal. Those tests have already been invented and undergoing validation.

We started way behind, but I am confident that the wealthiest country in the world can figure it out in two months. While we are establishing this testing infrastructure, we are also building hospital surge capacity. Point is I am cautiously optimistic about us handling the second wave.

as for massive unemployment, I think and hope that our country, and the world for that matter, start reevaluating having their manufacturing being dependent on an intransparent country like China . I think this is the wake up call and a lot of manufacturing will move back to the us.

I agree prices will certainly go down. I just don’t think it will be fire sale. Like I said, I picked up two contracts at 2015 prices. Just ignore the market price, it’s not a true reflection on market clearing p

Well said! I like the way you're thinking. & I share your cautious optimism !
ET

 

[Cousin Orville]

Small businesses are being offered loans that are 2.5x payroll (up to $10,000,000) and however much of that amount you can spend in 8 weeks is forgiven. Simply put, there is no payback this time, it's a giveaway. The remainder is payable after 12 months, but what do you think the default rate is going to be on those loans? Not sure about large businesses but you can bet there are payoffs and not just loans. This is not a fix by any means, it's triage. And it's simultaneously woefully inadequate and yet large enough to wreak havoc on the economy. I could be wrong here, but I think we are in for a world of hurt and a lot of people don't see it. But they're starting to. Oh yeah, on topic, DVC resale prices down.

While the 350B to small businesses are essentially grants, 500B to large corporations are indeed loans and will require payback. The US GDP is 20 trillion and the CARES Act just injected 2-4 trillion to float us all for the next 8 wks. The SBA loans/grants may need to be increased from 350B and there's talk on specific industry loans (airline, cruise, etc) in a 4th bill. But I don't think it's woefully inadequate. It seems just right for what's needed right now.

Whenever there is uncertainty, prices drop whether it's stocks, housing, or DVC interests. When there is certainty back in the market, stocks will rise and people will start buying houses and DVC contracts again. So long as we're in a stay at home order and maybe even a little after the order is lifted, DVC prices will continue to drop. Once we get back into a semi-regular routine, DVC prices will rise again. I agree with what some others have said that the prices were probably overinflated. Not bubble territory, but I think it will take a while before the prices come back to where they were a couple of months ago. If I were planning on buying, I'd look toward late May.

 

[Cousin Orville]

The underlying economy is fine. It’s a working capital / cash flow issue. Corporations don’t let cash sit around doing nothing to plan for a contingency in case of a pandemic that shuts down the entire economy for a month or two. Nor should they.

There is a difference between temporary cash flow / liquidity issue caused by a black swan event, which is what we have now, vs. structural underlying issue like an over levered consumer in 2008.

Anyways, differing views makes markets. I am buying now because I think prices will stabilize. If the resale market actually crash, I will plan to buy more.

I agree with this. This is not the Credit Crisis of 2008 which caused a fundamental collapse in financial systems. We're just frozen at the moment. Can't buy or sell any products or services. Once we get back to work, the money should start flowing again. With enough government support to get us through theses next couple months, we should all be ok on the other side.

 

[Galun]

Whenever there is uncertainty, prices drop whether it's stocks, housing, or DVC interests. When there is certainty back in the market, stocks will rise and people will start buying houses and DVC contracts again. So long as we're in a stay at home order and maybe even a little after the order is lifted, DVC prices will continue to drop. Once we get back into a semi-regular routine, DVC prices will rise again. I agree with what some others have said that the prices were probably overinflated. Not bubble territory, but I think it will take a while before the prices come back to where they were a couple of months ago. If I were planning on buying, I'd look toward late May.

I have a similar view on the timeline. However I am buying now. By late May I think there is a high probability that people start seeing light at the end of the tunnel (like China around two weeks ago when they slowly restarted their economy), and a small probability that it continues to escalate out of control.

If people see light at the end of the tunnel, with the government basically paying 2 months of payroll / rent / utilities for small businesses that employ 40% of the American workforce, and various grants / loans for big business that is contingent on retaining paychecks, I just don't think too many people will be in a panic to sell by then. Selling DVC is not an easy source of cash, it takes like 2 months for the entire process to finish, and that's assuming you sell immediately.

So, I am buying now, when there is still a lot of fear and uncertainty, and possible desperate seller. Again, the key is that maintenance fees has been paid, so there is no urgent cash spend required on DVC in the near future. So if you have immediate cash need, do you ask for a deferral or try to get a government backed low interest loan, or do you take a bath on DVC where the broker takes 6 - 10% and then you are getting crush on price? Or do you try to wait it out until later this year when you have to start paying 2021 maintenance fees?

I do think that if this continues until later this year, or if we fail to get the possible second wave under control in the fall, then we will start seeing fire sales. But if that were to happen, there are much bigger problems, and the government will step in again,

 

[Brianstl]

We are still a ways off on pricing for DVC. Back in 2014/2015 it was common to get AKL in the high 70s and low 80s. OKW was in the 60s-70s depending on size of contract. I see it going there again and soon.

DVC, Disney and the Airlines were in pure bubble mode. The prices on flights, tickets, and points increase greatly outpaced inflation by a tune of close to 2X-3X. I was actually shocked when I saw what I was paying for my trip this June versus 6 years ago. The same accommodations for a family of 5 (room, tickets, quick service meal plan) is running about 2K more per trip. The flights were running about 1K more (close to doubled) when I bought in January. Of course the airline tickets have cratered now which was is my fault for buying too soon.

This was not a sustainable model if an econmic slow down occured. Well it is here so let's see where it all lands.

Room rates for hotels were a huge bubble that will take years to get back where they were. This wasn’t just a Disney bubble, but an industry wide bubble.

 

[sethschroeder]

I am not buying that room rates are going down much at all. They may run the discounts more often with more rooms for the 25-35% off or possibly with free dining more often.

To be clear I am not talking about the first 12 months after they reopen I am talking starting 12+ months whenever the first major holiday falls. On top of this only if WDW has some huge anniversary coming up that could help draw people to the parks as well.

Hopefully Disney finally does something about attendance though and reduces park capacity. If they do you could find that staying onsite is potentially required at different times.

 

[lovethesun12]

It's 1000s only if you have a ton of points. Most people don't have 300+ points and very likely sit in the 100-200 point range which even at riveria puts you at $831 to $1662 for the MFs.

Everyone does their math differently but did you account for the increases you saw on rooms over time?

You even said you were priced out of Easter. Well for DVC that really wouldn't be a thing because you have points locked in that have value and while there are some changes in point requirements it's nothing crazy.

So yes you are happy to not have bought that's fine but I thought it was important to look at the whole picture.

I also have zero issues saying if you are that worried you probably could sell the resale contract bought 2-3 years ago and breakeven possibly even coming out ahead.

I have a 150 point contract I am keeping, looking at a direct contract possibly this next year, and just sold off a 30 + 50 point contracts I bought back in October/November for a profit.

So no one should be losing their shirt if they are proactive and selling now. If it came to it I would be renting my points to cover MFs.

I was speaking specifically for myself; I would need to buy over 200 points for the stay we enjoy. and I did look at the big picture at the time (well, pandemic excluded . A lot of extra things I wouldn't have considered came from pouring over DVC forums and pros/cons people mentioned as well as my own thoughts.

And yes you are right about Easter, I hadn't even considered that until you mentioned it really. But a lot of other things changed in that regard if I went down that rabbit hole. Flights increased over $250/person here over just a few years. Also, If we had bought DVC, we would have bought AKV. Last summer when we saw a great discount for BCV within our budget we decided to try that and both DH and loved it. So if we locked into DVC we probably wouldn't have gotten to stay there. That said I admit I do love AKV still and would love to return. We really like resort hopping in general. Also, while we love deluxe POFQ was also a favourite. I looked at all those things before I bought in addition to taking so long to break even and the decision at the time was not difficult.

I'm not arguing that no one should buy DVC. I'm not going to say whether it would have had a positive or negative impact on my life in the long run because I guess I still don't know. If prices did drop it is possible I would buy. I would just have to look at everything again and make a decision. But I'm defiitely not upset or anything that I didn't buy and invested instead.