Where do you think DVC resale prices are headed?

[Prince John Robin Hood]

Our next door school district just announced a layoff of almost 300 employees--bus drivers, teachers, custodians, food service, etc. We are a small area so that's a pretty decent number of people who are now out of work and going to have less disposable income. Magnify that across the US and I just can't imagine how this won't have effects on luxury purchases and travel.

It's odd how my 401k looks fine, resale prices are still too rich for my blood, and yet life is so not 'normal'! Does not compute!

The layoffs are happening around the world and will likely accelerate in 2021. Hopefully it is short term and not as deep as the Great Recession. FHA mortgage delinquencies were just reported to be at a 9 year high in Q2. A lot of people are struggling financially right now.

The amount of stimulus injected into the stock market is incredible and stock prices reflect that. The government has already provided trillions of dollars and may provide more.

 

[RamblingMad]

What is going on with pricing at ALK resale!!?? I thought I remember seeing low $100 per point a few months ago and now I see contracts for 120-135 per point! Any ideas? This is also leading me to wait until later in the year to see what happens with pricing.

Just watched the DVC show about Disney buying back contracts. It looks like Disney has put in a floor on contract prices in the short term.

The reality is that the worse case scenario for the virus hasn’t happened yet. Once we get into flu season with COVID at the same time, we’ll get a better idea of how well we can control it.

Economically, we have been held up by lots of stimulus. With all of that behind us, we’ll see the real economic hardship shortly. Some people might have to sell their DVC to raise cash.

 

[sethschroeder]

Just watched the DVC show about Disney buying back contracts. It looks like Disney has put in a floor on contract prices in the short term.

That show was recorded a week ago (10th) and after there had been a single day of buy backs. There has since been little information on much additional buyback on Disney's part and really nothing on the ROFR thread.

I would want comments on the numbers and % of contracts taken over the last week after that single day.

 

[Brianstl]

That show was recorded a week ago (10th) and after there had been a single day of buy backs. There has since been little information on much additional buyback on Disney's part and really nothing on the ROFR thread.

I would want comments on the numbers and % of contracts taken over the last week after that single day.

Right now to me it looks like the buybacks were possibly just Disney deciding to take the cash sitting on their table in their waiting list.

 

[RamblingMad]

That show was recorded a week ago (10th) and after there had been a single day of buy backs. There has since been little information on much additional buyback on Disney's part and really nothing on the ROFR thread.

I would want comments on the numbers and % of contracts taken over the last week after that single day.

Does it matter? They bought some. It sent a message that they put in a floor. Contract prices went up. Why buy more if they accomplished pushing up prices?

 

[mamaofsix]

Except its a generic range is my point and one that was shared before. Just seems a little off.

Yeah, it would be interesting to know the exact numbers. Forget where, but I had read that WDW was closer to 25% or 30% International visitors in recent years due to the surge in Brazilian visitors as their economy gained more wealth.

Either way, even if it's closer to the 20% mark, it's still a pretty large portion.

 

[CastAStone]

Does it matter? They bought some. It sent a message that they put in a floor. Contract prices went up. Why buy more if they accomplished pushing up prices?

That’s not why Disney bought those contracts. They bought the contracts because they ran out of contracts to sell

 

[Prince John Robin Hood]

Disney may continue with ROFR but it won't stop prices from dropping if they're going to drop. They won't buy everything.

 

[RamblingMad]

That’s not why Disney bought those contracts. They bought the contracts because they ran out of contracts to sell

What? If this were true, and Disney thought they could turn a profit, they have a DVC trading desk, where they would buy lots of contracts every day, not one off transactions.

 

[CastAStone]

What? If this were true, and Disney thought they could turn a profit, they have a DVC trading desk, where they would buy lots of contracts every day, not one off transactions.

It’s not a normal time.

Disney has barely acquired any contracts the last few months:

I made another chart. Sorry everyone. But I think it sheds light on why Disney needed to start ROFRing contracts again. This is the number of contracts Disney acquired by month for any reason (ROFR, Deed-in-lieu of Foreclosure, deed surrender, Foreclosure Auction, inheritance surrender, direct purchase on the open market, and so on) according to what has been filed with Orange County (the recent ROFRs have not been filed yet; they need to close first).

You'll notice that the numbers fall off a cliff starting in April. You'll also notice they dwindle close to zero in July and August 2020. I looked at the July and August deeds and Disney in the last several weeks has only filed acquisitions of Deed-in-lieu of Foreclosure (giving your deed to Disney to satisfy your non-payment of dues and avoid court proceedings) and deed surrender (straight up giving your timeshare to Disney for nothing in return in order to be rid of your future obligations), both of which are voluntary and can be done outside of court. There have been no auction acquisitions in the last several weeks, and only a smattering in the few months before that; I'm guessing most of what we see in April May and June are delayed closings from deals or settlements made pre-COVID.

Number of contracts acquired by DVD for any reason:
View attachment 518950

Resorts that never ever ever have wait lists have wait lists:

I spoke with my guide today as he was following up with me on a direct inquiry I had made about RIV and SSR. He said they didn't have any SSR points right now, and I would go on the wait list. He said it would be short because they were told they would be getting SSR points soon. I didn't ask about where the points were coming from, but maybe this is the answer?

I was put on the waitlist on Monday morning for 100pt with a September UY. My guide said no OKW points were available. He seemed surprised, so I’m guessing they ran out of points recently.

Direct sales have picked up:

I didn’t do a breakout by resort or really any work beyond a quick check but I ran last weeks filings with OC and they were ballpark of pre-COVID normal, with 211 contracts.

If they keep up this pace, don’t expect better incentives next month

direct DVC sales statistics

mid-month flash

recording dates 2020-08-01 to 2020-08-15

resort	deeds	points	% points
AKV​	22​	2,257​	5.3%​
BCV​	2​	125​	0.3%​
BLT​	14​	1,689​	4.0%​
BRV​	2​	305​	0.7%​
BWV​	14​	962​	2.3%​
CCV​	49​	8,848​	20.9%​
OKW​	35​	4,230​	10.0%​
PVB​	7​	728​	1.7%​
RVA​	123​	20,288​	47.9%​
SSR​	26​	2,270​	5.4%​
VGF​	8​	692​	1.6%​
	302​	42,394​

12 split contracts consisting of 3,798 points (9.0% of all points) and 31 deeds (10% of all deeds)

contracts (grouping split deeds)

type of contract	contract	% contracts	points	% points
initial​	135​	48%​	25,774​	61%​
add-on​	148​	52%​	16,620​	39%​
​	283​	​	42,394​	​

delay from effective date (presumably when someone tells their guide they want to purchase though potentially before the signing date if they don't sign same day) to recording date (recorded with Orange county Florida); I've included previous data for reference
View attachment 519311

And there are no foreclosure auctions scheduled so Disney has no line of sight to additional contracts anytime soon without ROFR:

I am not even seeing any DVC auctions set for all of August at this point? So there might not have been really any as possibly Disney is giving people a pass on MFs for more of an extended time right now?

Last auction was June 9 - I watched and most were bid up by a "supposed" third party to basically resale prices. Given the uncertainty of other liens, additional fees outstanding and no idea of banked or borrowed points, I didn't see any value. I say "supposed" because I've monitored these for a long time and often some sort of shell company ends up being the winning bidder on these wherever there is "action". I even researched a few and the deed was eventually assigned over to Disney, so I suspect Disney uses other entities to bid. I found it strange this time around given ROFR has not been active.

Rather than DVC giving a pass on MFs, I suspect the lack of auctions has more to do with difficulty in pursuing the foreclosure process with both limited resources at the OC Clerk, a preference for non-judicial foreclosures wherever possible and lack of DVC staff in office to move the process along. Like everything else, I expect these will pick up over time. I also watch the required public posting for these (that covers both judicial and non-judicial foreclosures) and there has been a trickle of postings in the last few weeks...but no date set for actual auctions yet.

TLDR: Disney has run out of contract to sell and needs to ROFR some to be able to sell some more

 

[Brianstl]

What? If this were true, and Disney thought they could turn a profit, they have a DVC trading desk, where they would buy lots of contracts every day, not one off transactions.

You don't need to buy contracts everyday when you have a waiting list at "sold out" resorts. You buy contracts in one off deals to fill that waiting list.

 

[Brianstl]

It’s not a normal time.

Disney has barely acquired any contracts the last few months:

Resorts that never ever ever have wait lists have wait lists:


Direct sales have picked up:



And there are no foreclosure auctions scheduled so Disney has no line of sight to additional contracts anytime soon without ROFR:



TLDR: Disney has run out of contract to sell and needs to ROFR some to be able to sell some more

Did the halt in foreclosures and evictions in the CARES Act impact Disney's ability to foreclose on DVC contracts?

 

[CastAStone]

Did the halt in foreclosures and evictions in the CARES Act impact Disney's ability to foreclose on DVC contracts?

No, but since that represents (I’m guessing) 90+ percent of consumer foreclosures, I’m assuming banks just stepped away from it altogether for the time being

 

[sethschroeder]

Yeah, it would be interesting to know the exact numbers. Forget where, but I had read that WDW was closer to 25% or 30% International visitors in recent years due to the surge in Brazilian visitors as their economy gained more wealth.

Either way, even if it's closer to the 20% mark, it's still a pretty large portion.

Think it comes down to money spent though beyond just the park entrance and that has been a common thread on how Disney seems to talk.

Also I have to assume a 20% foreign visitor mark makes up a much lower number for DVC owners less than 10% if not less than 5% of owners.

I mean it might be a bad assumption but I would suspect foreign DVC owners would sell at the same rate as those who are in the US so we would see way more international sellers in the ROFR thread than we typically see.

I think foreign visitors matter for a couple reasons:

• Small part of the larger snowball that is rolling down the hill on resale pricing going up or down with buying/selling
• They possibly drive up rental prices having people possibly rent out their points instead of sell
• They eat up discounts from Disney allowing Disney to charge more for cash rooms skewing the math back more towards DVC

 

[Prince John Robin Hood]

No, but since that represents (I’m guessing) 90+ percent of consumer foreclosures, I’m assuming banks just stepped away from it altogether for the time being

The optics of foreclosing during Covid wouldn't be good. Banks are even trying to work with clients that have delinquent credit cards instead of sending them to collections. I have no knowledge of DVC financing but I've got to assume that if prices start to drop enough it will force companies to foreclose on contracts. Not sure how much "enough" is but I'm thinking somewhere in the range of 10% below current prices.

 

[RamblingMad]

The optics of foreclosing during Covid wouldn't be good. Banks are even trying to work with clients that have delinquent credit cards instead of sending them to collections. I have no knowledge of DVC financing but I've got to assume that if prices start to drop enough it will force companies to foreclose on contracts. Not sure how much "enough" is but I'm thinking somewhere in the range of 10% below current prices.

If this happens, it’s more likely to happen early next year. Q1 can be really ugly without stimulus and deferments ending.

 

[bookwormde]

8/17 update

number of newly posted resale contracts at about 240% of average

 

[poofyo101]

That’s not why Disney bought those contracts. They bought the contracts because they ran out of contracts to sell

You do not know that to be a fact though. Just pure speculation as was his opinion.

 

[CastAStone]

You do not know that to be a fact though. Just pure speculation as was his opinion.

They literally have told people that.

 

[poofyo101]

They literally have told people that.

Who has worked in rofr has ever given an explanation of why they are buying something back? I may have missed that.