Where do you think DVC resale prices are headed?

[MICKIMINI]

Disney hasn't had their parks closed to 3 consecutive days in 25 years. Let alone 3 weeks...and they will probably be closed for at least a total of 2 months.. They aren't going to let points go for 20$ per, but rofr activity will diminish. Disney hasn't had to worry about bankruptcy in 25 years. They have a lot of debt right now (they just spent 70 billion). The "gane" hasn't seen Disney's operating income drop like this in 25 years. You have a lot of experience, but no one has seen anything like this. Hopefully it passes quickly, but even then, we don't know what the financial aftermath of this will be.

I honestly hope you are right, and that ROFR doesn't change much because that will mean we are past this with minimal damage.

This is unprecedented and you are correct that "we don't know what the financial aftermath of this will be". Let's hope for the best and prepare for the worst. Disclosure: Along with being a 25 yr DVC member, I've been a featured guest before at WDW being backstage and involved, from experience I know their brand is their biggest asset.

 

[TraderSamWDW]

This is unprecedented and you are correct that "we don't know what the financial aftermath of this will be". Let's hope for the best and prepare for the worst. Disclosure: Along with being a 25 yr DVC member, I've been a featured guest before at WDW being backstage and involved, from experience I know their brand is their biggest asset.

Of course it is, its one of the most trusted brands in the world! And there is a decent financial guy out in Nebraska....buffet something or other,.... that says, protect the brand at all costs!

 

[TraderSamWDW]

I disagree.
Disney will be fine.
And to excitedly spend $20,000 rather than $30,000 on a timeshare while the market is crashing around oneself would be... Not the best use of one's money.

Dis current stock price of around $85 will look unbelievably low in 3-5yrs

Disney will be fine (assuming this doesnt go on for a year or something).
Why do you say buying a time share is not the best use of ones money (I agree...if times are bad), but DIsney exercising ROFR is exactly that - Disney buying a time share. Why would it be a good use of their money?

I personally think Disney is a fine long term buy, but Wall Street does not want fine in 3-5 years, they want fine in 3 months.

Plus, with no cash, Disney can not buy back their own stock, therefore the cant utilize the wall street trick of lowering the price to earnings ratio by lowering the number of outstanding shares. Less outstanding shares raises earnings per share. And investors are going to want their dividends back.

If after all this chaos is over Disney ends up in a post 9/11 state, being closed 2 months will mean a 12 month run( starting 3/16/2020) that part attendance that is 16% lower then 9/2001 - 9/2002 since they where only open 10 months.

Again, I think they will recover, I just think ROFR is going to be relaxed a good degree (not eliminated).

Again, I hope this is over in a week, and we get on with out lives in good health and good financial times

 

[CaliAdventurer]

And what if Apple buys them?

 

[bookwormde]

back on topic, limited data but AKV is tracking at an average of 109

 

[ELMC]

When there are more contracts on the market than buyers who want those contracts, prices will definitely drop. If unemployment problems stretch out longer than a month or two, people will be looking for alternate sources of income and DVC contracts will be among the first assets to go. ROFR won't protect contracts from decreasing in value, but it would probably keep them from becoming worthless.

I agree. I would also like to add that it won't just be ROFR keeping contracts from being worthless, the "DVC vultures" will do this as well. Even in the biggest economic downturns there is always money sitting on the sidelines. There are a number of potential buyers who will be able to shake this off and will be looking to buy the dip on DVC points. The big question is...how many and how much will supply outpace demand?

While it doesn't help anything for me to speculate, I'm doing it anyways. DVC is a completely useless product right now and into the foreseeable future. Resale contracts are likely to start free-falling in value in the next few days or weeks. Will likely end up nearly worthless. Even if the economy is able to partially recover this year (that's optimistic in my opinion) the cost for on-site rooms will likely be significantly reduced so the value of DVC will be reduced accordingly. I'm not a DVC owner and might not fully understand how it works, but I don't see a scenario where it retains value.

Go ahead and speculate, that's the fun of this discussion.

I agree with just about everything you wrote except the part about the contracts being nearly worthless. I have been Mr. Doom and Gloom on here but I think you took that title away from me with this prediction. That said, I think we are about to return to the days of $60 pp on-site DVC resale contracts.

 

[KayKayJS]

I agree. I would also like to add that it won't just be ROFR keeping contracts from being worthless, the "DVC vultures" will do this as well. Even in the biggest economic downturns there is always money sitting on the sidelines. There are a number of potential buyers who will be able to shake this off and will be looking to buy the dip on DVC points. The big question is...how many and how much will supply outpace demand?


Go ahead and speculate, that's the fun of this discussion.

I agree with just about everything you wrote except the part about the contracts being nearly worthless. I have been Mr. Doom and Gloom on here but I think you took that title away from me with this prediction. That said, I think we are about to return to the days of $60 pp on-site DVC resale contracts.

I hope I still have a job if $60pp contracts are around.. We have been wanting to buy Aulani for years.

It will be interesting to see how this all plays out. Obviously I would prefer the economy stay strong and pay more.

 

[rkstocke5609]

While it doesn't help anything for me to speculate, I'm doing it anyways. DVC is a completely useless product right now and into the foreseeable future. Resale contracts are likely to start free-falling in value in the next few days or weeks. Will likely end up nearly worthless. Even if the economy is able to partially recover this year (that's optimistic in my opinion) the cost for on-site rooms will likely be significantly reduced so the value of DVC will be reduced accordingly. I'm not a DVC owner and might not fully understand how it works, but I don't see a scenario where it retains value.

I disagree with this. Resales will not free fall in the next few days or weeks. Very few that own DVC contracts will dramatically drop their price to panic sell. Most wont be that desperate. I do agree that prices will fall over the next 12 months. How much will be determined by the length and ramifications of the crisis. I do not agree with “end up nearly worthless” on any level. I bet there are some folks out there chomping at the bit to buy more resale points at huge discounts. But, maybe I’m a glass full kinda guy....

 

[mamaofsix]

Where do you think DVC resale prices are headed?

Below is the average asking on the aggregating site and my guesses for what resale contacts that come on the market will average for the next 6 months, what are yours?

3/20 4/1 5/1 6/1 7/1 8/1 9/1



AKV 114 110 105 100 96 92 90

AUL 101 98 95 90 85 82 80

BLT 150 140 135 130 128 124 124

BCV 147 145 140 135 132 130 128

BWV 126 120 115 110 106 103 100

BRV 100 95 90 85 80 76 72

CCV 155 150 142 136 128 125 125

VGC 199 195 190 186 182 180 180

VGF 177 172 168 165 162 160 158

HH 81 78 72 68 65 62 60

OKW 102 97 90 84 78 72 70

POLY 148 142 136 130 125 120 120

SS 106 100 94 88 85 82 80

VB 67 64 60 56 52 50 48

To answer you question, personally, I think these numbers are optimistic. In the past few days alone, prices have already dropped at some resort to your May or June levels. Listings for VGF in the high 150s, AKL at 105, BCV in the 130s...

I think we're going to see a much steeper drop.

We have not bought into DVC yet, but a good deal would be mighty tempting.

 

[bookwormde]

To answer you question, personally, I think these numbers are optimistic. In the past few days alone, prices have already dropped at some resort to your May or June levels. Listings for VGF in the high 150s, AKL at 105, BCV in the 130s...

I think we're going to see a much steeper drop.

We have not bought into DVC yet, but a good deal would be mighty tempting.

Yes I was trying to not be pessimistic or alarming but it could move to 100% of the same percent decline as the great recession or even further,

I saw what I created as a baseline that can/will be adjusted as data comes in.

Actual sale prices are also going to be significantly different from asking price and this tends to widen as the supply demand ratio grows

 

[MICKIMINI]

Owners, even those who have lost jobs already are not going to list quite yet, for the most part unless they are really on thin ice. People are waiting to see how much money our government offers up to keep things going. Many owners are retirees with good size fixed monthly checks, lots of people paid off debt during the last go-go decade and are in good shape and many will not loose their jobs. There is money out there...and will be even after the dust settles.

The amount of available contracts will start a price war as those listed have to compete for whatever buyers are out there. There will be a lag time as negotiations and offers are thrown out there. Owners will initially reject lower offers and after a period of time may adjust their thinking. This is an emotional purchase with most DVC people heavily invested in all things Disney...but the market shake up happens periodically and people need to do what is right for their family. Those waiting to purchase may be a life saver to those that need to sell. Peace.

 

[bookwormde]

One other item that I could not get my head around was if the additional risk not previously recognized in renting points will either bring those prices down or make it be perceived by owners a to much of a haste for the benefit and they begin to reduce their points to just those that are presently needed. I do think there will still be a market for transfers, since the risk assignment there is clear.

Probably just a small incremental increase in resales from this, but in a saturated market could have an impact

 

[Matty B13]

Problem for most owners who could barely afford to keep up with MF's, at least they could rent to get by. But now, rentals are a mess and will be for some time to come, plus Disney will probably have to discount rooms steeply to get people to come back after this.

I know our family will be staying in bigger units, since the whole rental market is a mess right now.

 

[mamaofsix]

Yes I was trying to not be pessimistic or alarming but it could move t 100% of the same percent decline as the great recession or even further,

I saw what i created as a baseline that can/will be adjusted as data comes in.

Actual sale prices are also going to be significantly different from asking price and this tends to widen as the supply demand ratio grows

Really good points. I agree with those above that say ROFR will be non-existent while Disney tries to stay afloat - which would essentially be a "first." We're in unprecedented territory and recessions of the past can't compare to what's happening right now. This might sound extreme (call me crazy), but here are my predictions for where prices will be at come September. For those who will need to sell, I hope I'm wrong, though:

AKV 65

AUL 60

BLT 90

BCV 70

BWV 70

BRV 60

CCV 80

VGC 120

VGF 100

HH 40

OKW 55

POLY 80

SS 50

VB 30

 

[bookwormde]

Problem for most owners who could barely afford to keep up with MF's, at least they could rent to get by. But now, rentals are a mess and will be for some time to come, plus Disney will probably have to discount rooms steeply to get people to come back after this.

I know our family will be staying in bigger units, since the whole rental market is a mess right now.

Thanks, I had not considered that some would just book bigger villas to use the points

 

[bookwormde]

Really good points. I agree with those above that say ROFR will be non-existent while Disney tries to stay afloat - which would essentially be a "first." We're in unprecedented territory and recessions of the past can't compare to what's happening right now. This might sound extreme (call me crazy), but here are my predictions for where prices will be at come September. For those who will need to sell, I hope I'm wrong, though:

AKV 65

AUL 60

BLT 90

BCV 70

BWV 70

BRV 60

CCV 80

VGC 120

VGF 100

HH 40

OKW 55

POLY 80

SS 50

VB 30

That is about where my model was if it gets as bad as after 2008, though I had OKW at 40 for 2042 contracts and HH at 35

 

[Matty B13]

Thanks, I had not considered that some would just book bigger villas to use the points

I just had to help a renter rearrange their stay in the beginning of April, even though I told them it was a non-refundable transaction, but I wouldn't have felt right just taking their money. I was able to get some of the points back, but not all, luckily it was for under 20 points.

I think a lot of people who liked to own a lot of points, and enjoyed doing rentals for people, will be rethinking this approach to owning DVC from now on. We have three different UY's and would rent out our extra points, but when traveling late in your UY makes it almost impossible to rearrange a trip if something happens...... or your renters trip.

I'll bet that a lot of contracts will be re-written to take pandemics into account, and not be refundable. This will probably dry up the rental market of renters not wanting to take the risk, but you never know, most people love a deal at 50% off of Disney's prices.

 

[CLE2WDW]

It’s kind of fascinating... I’m in finance so I liken Disney/DVC to the Fed. They are the “lender of last resort” and in times of distress (low DVC sale prices) they have the right to step in and provide liquidity (buy back) the contract before it goes through the secondary market. From there the contract goes into their inventory (similar to a QE program) where they can either resell the asset at a future date or simply retain the asset.
Ok enough of that... here’s my point: in times of severe distress (hello we are here) the ability for DVC/Disney to intervene in resales comes into question. Just like the current market equity dynamics I think this is a phenomenal opportunity to go bargain hunting. So go ahead and put in that $110-point offer for that POLY contract... that $130-point for that BCV contract... and that $150-point VGF contract. I’m not saying for sure that it passed ROFR but it stands to reason if we flood the market with low bids the price will adjust accordingly. As Warren Buffet our it best “Be greedy when others are fearful and fearful when others are greedy.”

 

[bookwormde]

It’s kind of fascinating... I’m in finance so I liken Disney/DVC to the Fed. They are the “lender of last resort” and in times of distress (low DVC sale prices) they have the right to step in and provide liquidity (buy back) the contract before it goes through the secondary market. From there the contract goes into their inventory (similar to a QE program) where they can either resell the asset at a future date or simply retain the asset.
Ok enough of that... here’s my point: in times of severe distress (hello we are here) the ability for DVC/Disney to intervene in resales comes into question. Just like the current market equity dynamics I think this is a phenomenal opportunity to go bargain hunting. So go ahead and put in that $110-point offer for that POLY contract... that $130-point for that BCV contract... and that $150-point VGF contract. I’m not saying for sure that it passed ROFR but it stands to reason if we flood the market with low bids the price will adjust accordingly. As Warren Buffet our it best “Be greedy when others are fearful and fearful when others are greedy.”

this is where I was after 2008, a OKW 210 pt contract came up at $52 and I offered $45 thinking first that it would not be accepted and second that DVD would be 90+% likely to ROFR it
In the end if went through and I got points for $1.50/year based on 30 years remaining. I got a lot of years of big family trips before selling it for $80+

 

[CLE2WDW]

this is where I was after 2008, a OKW 210 pt contract came up at $52 and I offered $45 thinking first that it would not be accepted and second that DVD would be 90+% likely to ROFR it
In the end if went through and I got points for $1.50/year based on 30 years remaining. I got a lot of years of big family trips before selling it for $80+

Bravo on being the Warren Buffett of DVC contracts. You took a prudent risk and you have been and will continue to reap the rewards for years to come.
Everyone that’s reading your phenomenal deal is saying “I wish I would have done that.” Well this could be your second chance. I’d venture to guess that within the next 2-3 weeks the resale market will grind to a halt and desperation mode may set in for sellers. That’s the time to strike. The list prices might not change greatly as sellers hope to walk away with that value but their willingness to accept a low offer might be more apparent since they don’t know if/when the next offer will come.