Where is bottom?

[Matty B13]

My first 2 contracts that I bought in 2016 were fully loaded, ie, 2015 banked into 2016, full 2016 points, and full 2017 points from people who thought they wanted to and/or could afford to go to Disney every year and ended up selling within 3 years of buying them (I checked their deeds). I'm guessing that there are a lot of people within the last 3 years that bough direct and are now reconsidering their purchases and/or need to get out of their contracts.

 

[BeachClub2014]

1) It’s a message board; almost everything everyone types is opinion. What facts are presented are usually followed by opinionated commentary, which is exactly what I did above.

2) Ah, but what matters is the EFFECTIVE cost. What’s the average DVC ownership—10-12 years? What’s the average cost of a resale contract—$150pp? What are the average dues, $8-9? So the effective cost of DVC ownership for the average buyer is majority going to be the contract price. And all of this is rather meaningless in a recession. I’m not sure telling someone, “Hey, I know things are bad now, but remember, the cost of this contract may be steep now, but if you hold it for a generation, the dues catch up. So really this $50,000 today isn’t that big of a deal when looking at 2050 and you’ve spent an additional $90,000 in cumulative dues…”

3) The entire point is speculating on what direction the price of DVC contracts goes. If I can wait a year for a 20% or more discount, I just might. If a contract drops $20-30pp, it’s rather headscratching when people loathe high dues resorts when we’re talking about a few bucks, yet paradoxically comfortable with paying an effective $30-40 due because you had to buy a contract today vs. wait a year.

4) Travel declines during economic downturns, and that’s precisely why you see discounts on rental cars/airfare/lodging/etc. The positive about DVC is the theory of “locking in today’s rate” with the fear Disney will charge $3000/night at a standard Deluxe studio in 20 years (not going to happen). The same works in reverse: buying DVC today locks you in at current levels when hotel discounts arrive in the downturn, which will also feed on lowering DVC prices.

All I’m saying is DVC is going to be on sale for many reasons as the year goes on. Some people don’t care if they overpay by thousands/tens of thousands because they have to buy and go/use this year. If I think I can save 20% or more by waiting 6 months for a big purchase like this, I think I would. Just because cumulative dues overtake my contract buy in in 20 years doesn’t really mean I’m anxious to overpay today when I can wait a couple quarters.

This has been a discussion and debate ever since DVC came into existence. The DVC resale market is not really any different than any other commodities market. For every "winner," there is a "loser." There are ebbs and flows with prices and volatility in the resale market. So what? Trying to time the market is nearly impossible.

When you look at the raw number of contracts being bought and sold at any given time, it isn't significant to the overall DVC landscape. Let's say that there are currently 3,000 contracts listed for sale in aggregate over the various brokers. That's a tiny percentage of overall contracts.

I have no idea if Disney will be charging $3,000 per night in 20 years. Nobody does. I am confident that the rates will be much higher than they are today, so "locking in today's rate" as a hedge against inflationary pressure doesn't seem like a bad idea.

 

[DVCSunDevil]

I find it compounded by additional challenges:

Boardwalk and BCV have a competitively priced product nearby in Swolphin…. If you are looking for a studio especially, there is yet another reason to not buy these products….

With all due respect, Swolphin is no where near BCV or BWV in terms of accommodations and theming. Yes, it is nearby. But that doesn't mean it is equal. Someone I work with stays at the Swolphin on every WDW trip (usually every other year). We were staying at BCV when he and his family were there so we met at Epcot. He and his family came by to check out BCV after we all left the park and their jaws just about hit the floor. They were blown away...and his wife starting researching DVC contracts on their flight home. LOL. I have been in Swolphin before (never stayed there, though) and it is nowhere near the DVC resorts in terms of total experience. That is what you are paying for at DVC.

 

[MarkNC2Disney]

1) It’s a message board; almost everything everyone types is opinion. What facts are presented are usually followed by opinionated commentary, which is exactly what I did above.

2) Ah, but what matters is the EFFECTIVE cost. What’s the average DVC ownership—10-12 years? What’s the average cost of a resale contract—$150pp? What are the average dues, $8-9? So the effective cost of DVC ownership for the average buyer is majority going to be the contract price. And all of this is rather meaningless in a recession. I’m not sure telling someone, “Hey, I know things are bad now, but remember, the cost of this contract may be steep now, but if you hold it for a generation, the dues catch up. So really this $50,000 today isn’t that big of a deal when looking at 2050 and you’ve spent an additional $90,000 in cumulative dues…”

3) The entire point is speculating on what direction the price of DVC contracts goes. If I can wait a year for a 20% or more discount, I just might. If a contract drops $20-30pp, it’s rather headscratching when people loathe high dues resorts when we’re talking about a few bucks, yet paradoxically comfortable with paying an effective $30-40 due because you had to buy a contract today vs. wait a year.

4) Travel declines during economic downturns, and that’s precisely why you see discounts on rental cars/airfare/lodging/etc. The positive about DVC is the theory of “locking in today’s rate” with the fear Disney will charge $3000/night at a standard Deluxe studio in 20 years (not going to happen). The same works in reverse: buying DVC today locks you in at current levels when hotel discounts arrive in the downturn, which will also feed on lowering DVC prices.

All I’m saying is DVC is going to be on sale for many reasons as the year goes on. Some people don’t care if they overpay by thousands/tens of thousands because they have to buy and go/use this year. If I think I can save 20% or more by waiting 6 months for a big purchase like this, I think I would. Just because cumulative dues overtake my contract buy in in 20 years doesn’t really mean I’m anxious to overpay today when I can wait a couple quarters.

Yeah, I wouldn’t buy right now unless absolutely necessary. It’s clear one of Disney’s responses to higher interest rates is… no ROFR. Nobody is guarding the gates. Keep calm and carry on smartly

 

[TinkB278]

I have never seen an 84 month 0 percent APR car loan with any car's finance company, even when the fed rate was 0. Maybe 60 months.

Maybe not 84 month but I have a 72 month 0% Apr loan on both my cars.

 

[Matty B13]

Also, people who were buying, then stripping, and then reselling contract before are now going to have to either take a loss and sell, or keep the contract and rent the points (along with paying dues). Seems like rental prices are coming down a little and could accelerate. With the declining prices the flipping of contracts is dead now, at least until the market goes back up which could take awhile.

 

[Cfabar1]

It’s been interesting to me watching how certain resorts have been more resilient than others…. HHI seems particularly overpriced at the moment given the high dues, 2042 status, and the fact it is a non WDW property…

 

[bwang123]

They got a $10 billion bill due in less than a year as they’re obligated to buy the rest of the stake in Hulu.

comcast is going to end up with full ownership.

 

[BamaGuy44]

This has been a discussion and debate ever since DVC came into existence. The DVC resale market is not really any different than any other commodities market. For every "winner," there is a "loser." There are ebbs and flows with prices and volatility in the resale market. So what? Trying to time the market is nearly impossible.

When you look at the raw number of contracts being bought and sold at any given time, it isn't significant to the overall DVC landscape. Let's say that there are currently 3,000 contracts listed for sale in aggregate over the various brokers. That's a tiny percentage of overall contracts.

I have no idea if Disney will be charging $3,000 per night in 20 years. Nobody does. I am confident that the rates will be much higher than they are today, so "locking in today's rate" as a hedge against inflationary pressure doesn't seem like a bad idea.

Agree 100%. If only it were so easy to "read the indicators" and be so sure what a certain commodity or the overall economy will look like in 1 or 2 years. None of us would own DVC, we'd just have our butlers drive us over to MK from our 7 million dollar mansion in Golden Oak

Never forget, economists have predicted 27 out of the last 3 major recessions by reading the same indicators people look at now. There's always a certain percentage of people predicting an imminent catastrophe. Eventually they're right of course. But timing a market is rarely the ideal strategy. And even if this does turn out to be a bad recession, it certainly won't be the first since DVC has existed. There will be downward price pressure of course, but as long as WDW remains a popular destination, I can't see a sudden "bubble popping" like collapse.

Then again maybe it will. I don't know what I'm talking about just like everyone else

 

[ClaraOswald]

This has been a discussion and debate ever since DVC came into existence. The DVC resale market is not really any different than any other commodities market. For every "winner," there is a "loser." There are ebbs and flows with prices and volatility in the resale market. So what? Trying to time the market is nearly impossible.

When you look at the raw number of contracts being bought and sold at any given time, it isn't significant to the overall DVC landscape. Let's say that there are currently 3,000 contracts listed for sale in aggregate over the various brokers. That's a tiny percentage of overall contracts.

I have no idea if Disney will be charging $3,000 per night in 20 years. Nobody does. I am confident that the rates will be much higher than they are today, so "locking in today's rate" as a hedge against inflationary pressure doesn't seem like a bad idea.

If rack rate prices for the hotels jump significantly in the next decade or two....won't the amount of points it costs to book a room also increase? I wonder about that for people who buy less points. Down the road, will that 150 point contract only get them 2 nights a year in a studio or something??

 

[mattburmeister]

If rack rate prices for the hotels jump significantly in the next decade or two....won't the amount of points it costs to book a room also increase? I wonder about that for people who buy less points. Down the road, will that 150 point contract only get them 2 nights a year in a studio or something??

No because your points represent time not money.

 

[ClaraOswald]

No because your points represent time not money.

I guess I just mean if 6 nights at VGC studio right now would cost 128 points....is that same exact studio for 6 nights in ten years going to cost 200 points or something? (Maybe I'm not understanding the whole concept though.....)

 

[Matty B13]

I guess I just mean if 6 nights at VGC studio right now would cost 128 points....is that same exact studio for 6 nights in ten years going to cost 200 points or something? (Maybe I'm not understanding the whole concept though.....)

Yes, DVC can't inflate the point charts, they can shift points higher for some units and seasons but has to decrease the same amount for the resort.

 

[AstroBlasters]

I guess I just mean if 6 nights at VGC studio right now would cost 128 points....is that same exact studio for 6 nights in ten years going to cost 200 points or something? (Maybe I'm not understanding the whole concept though.....)

It will be in the ball park, that is of the great things about DVC!

There are a set number of points that can’t be changed, so if they make something more expensive they have to reduce the cost of something else.

That’s why some of the older WDW resorts have point charts that cost so much less that newer resorts.

 

[SkampyOne]

That’s why some of the older WDW resorts have point charts that cost so much less that newer resorts.

An important reminder to those of us who have 11 month access to those amazing point charts, that in 2042, we might have "sticker shock" when we realize we may not have enough points for the same stay at newer resorts with higher point charts. A week in Jan currently ranges between 73 points to 125 points and it's a spread of almost 100 points for a week at Christmas! That being said, if restrictions continue for resale owners, it can't really get much worse because we'll be blocked from new builds with even higher point charts!

 

[AnnaKristoff2013]

Never forget, economists have predicted 27 out of the last 3 major recessions

And Disboards Posters have predicted 3,282 of the last 3 major recessions, including 583 in the past 12 months.

 

[zavandor]

I guess I just mean if 6 nights at VGC studio right now would cost 128 points....is that same exact studio for 6 nights in ten years going to cost 200 points or something? (Maybe I'm not understanding the whole concept though.....)

As others have said, the total amount of points needed to book a unit in a certain resort for a year cannot change. DVC can reallocate points to balance demand, but if for example they increase the points needed to book in October, they need to take down the points needed to book, for example, August. And that's exactly what they did the previous 2 years.
So if you buy a contract with the points necessary to book 1 week in your favorite period, after a reallocation you might be short of some points or have an excess. Someone wins and someone loses.

 

[RichVIII]

And Disboards Posters have predicted 3,282 of the last 3 major recessions, including 583 in the past 12 months.

They also predicted starting direct price at GFV2 at $300 as well.

 

[ClaraOswald]

Thanks for the explanation. That helps. I was worried if we only buy on the lower end of points now, we'd be in trouble a decade down the road and basically be forced to get another contract. That's not to say we wouldn't want to get a 2nd contract later anyway in order to get a larger villa each time but I wouldn't want to have to get more just to get similar to what is available currently.

 

[beldred]

Thanks for the explanation. That helps. I was worried if we only buy on the lower end of points now, we'd be in trouble a decade down the road and basically be forced to get another contract. That's not to say we wouldn't want to get a 2nd contract later anyway in order to get a larger villa each time but I wouldn't want to have to get more just to get similar to what is available currently.

THAT'S not why you'll buy a second contract.
Seriously, addonitis is real and if you think you are immune you'll be in a world of surprise just like I was. (We've owned for literally 4 months and are already offering on a 2nd contract. LMAO)