Why are prices going up?

[sonofanarchy]

Also, they just bought Star Wars and own Marvel comics. They have so many branding opportunities in the future that they may become even more popular. I can't wait for Star Wars land

But this isn't a conversation about the Disney parks. It's about DVC. Star Wars will have very little baring on DVC. Marvel is absolutely useless in WDW as they can't build any attractions or use the characters.

 

[YourEveryDayAdam]

WDW is going nowhere. It'll always be around. DVC however, is going to reach a limit. And that's OK. They'll have made their money and owners will have their vacations. The only thing I'd question is how well will Disney maintain the DVC properties once they stop selling?

I would honestly be shocked if DVC hits their limit any time soon. You have to remember that WDW has only developed about 40% of the land that they own. There is plenty of more space for them to add more DVC resorts that aren't attached to an existing resort. Or, optionally, they can add on to an existing resort (similar to the tree houses and SSR).

Plus once they reach the capacity for building any new resorts, that'll probably be around the time that a bunch of contracts will expire (2042), Then they can do a major refurbishment at those resorts, and sell them as new.

 

[sonofanarchy]

I would honestly be shocked if DVC hits their limit any time soon. You have to remember that WDW has only developed about 40% of the land that they own. There is plenty of more space for them to add more DVC resorts that aren't attached to an existing resort. Or, optionally, they can add on to an existing resort (similar to the tree houses and SSR).

Plus once they reach the capacity for building any new resorts, that'll probably be around the time that a bunch of contracts will expire (2042), Then they can do a major refurbishment at those resorts, and sell them as new.

But again, wherever they decide to build DVC from this point, it won't be in a prime locale. They got the money they did for BLT and for GFV because of location. They would never have gotten that kind of money for Saratoga.

Adding on to any Mods or Values would be pointless as people wouldn't spend the money for DVC there.

Disney needs to concentrate on adding more parks and recreation before adding any more DVC. They built GFV and will build Poly's because they were the only Deluxe Resorts without DVC and they would be obvious cash cows. I just don't see where DVC goes on WDW property after this, unless they want to sell a heck of a lot cheaper than they currently are.

 

[JAG107]

Who's to say they won't build an all new deluxe in the future with both CRO and DVC units? I don't think they've used all of their prime real estate yet either. All it will take is a plan and funding, why couldn't they build again after poly is done with?

 

[sonofanarchy]

Who's to say they won't build an all new deluxe in the future with both CRO and DVC units? I don't think they've used all of their prime real estate yet either. All it will take is a plan and funding, why couldn't they build again after poly is done with?

I just don't see it happening. DVC, like any part of Disney, hasn't stayed on target with current inflation rates. People will still go to Disney on a non-committal basis, but at the rates at which DVC has increased, fewer and fewer people will be able to afford to buy in. Probably a very good reason the GFV is the smallest DVC yet.

 

[NoleFan]

what makes no sense to me are these stripped contracts (no points until 2015)??? I would sooner wait to see what happens with the market than wait 2 years for points or 1 year to borrow! Even those are going for the $80's!!

 

[twinsouvenirs]

That said, one way in which owners could be impacted in the long run is if the rate of defaults rises dramatically. Owners of a resort must collectively pay for maintenance and upkeep on the property. But if there are fewer owners, the burden increases for those who remain.

Imagine that in 2040, 25% of OKW owners have defaulted (failed to pay loans or dues.) The remaining 75% would have to pay to maintain the resort. That could drive up their dues higher than expected. Some of the costs are variable--25% of the rooms technically no longer need to be maintained or cleaned, there are fewer check-ins for the front desk staff to handle, fewer bus passengers, etc. But the fixed costs like pool operations, security, landscaping, taxes and others still have to be paid regardless of the number of owners.

It's a problem which other timeshares are dealing with today. An undesirable resort in an undesirable location is not a good combination. Lobbying groups are even pushing for legislation to block owners from walking away from timeshares. Since most timeshares have perpetual ownership, this even impacts the heirs of a buyers--the children or siblings of a deceased TS owner are stuck paying for a property they never wanted.

Disney's ability to re-sell older contracts and even rent the rooms to non-owners at nightly rates mitigates this risk. DVC still has means to rid itself of points left behind via default.

In the case of contract defaults, doesn't Disney usually take them back into their inventory? And in that case, doesn't Disney assume responsibility for the maintenance associated with those units?

 

[jerseyduke]

IOA and universal itself has certainly hurt Disney. (Part of the reason they built Expedition Everest). They do very little to appeal to the trill ride seeker.

They have brought a new park into existence about every 10 years. Just about time for a new one....

More DVC opps, cash rooms, everything.

Also, once Cabana Bay opens at US, thats that many more ppl who are NOT staying at WDW

 

[SFlaDisneyfans]

I think one needs to consider, when looking at the price jump recently, the overall total cost of the contracts. Unlike a house where a 10% jump in retail price could mean a jump in total price by 10-30+ thousand dollars, a 10% price jump on BWV could be 10-ish dollars per point. On a 150 pt contract that is "only" 1500$.

I feel buyers are paying the new prices because to someone who can "afford" to purchase DVC, an additional 1000-3000$ is not a huge impediment. They may think "I would rather pay 9000$ but I want it for my upcoming vacation so 10500$ is a price I am willing to pay". They are looking less at the percentage and more at the overall dollar amount.

 

[twinsouvenirs]

what makes no sense to me are these stripped contracts (no points until 2015)??? I would sooner wait to see what happens with the market than wait 2 years for points or 1 year to borrow! Even those are going for the $80's!!

TOTALLY AGREE. I think it's practically lunacy. You are essentially giving your sellers 1/2 years free vacations on your points. You'd be better off paying a few extra dollars per point for a flush contract and then renting those to pay for part of the cost of the contract!

If your contract is 150 pts, and it's stripped till 2015, you are losing the use of a total of 300 points ($3,600 at 12/pt rental, today's rate). That is like giving your seller $3,600 extra. Even if you wouldn't rent them, you're still paying for vacations this year and next out of pocket that you woudn't have to otherwise.

The only argument you could make is that you are hedging against pt increases, but honestly, logically the net present value of the points should go down as the contracts age-- so with a super stripped contract, you are only buying 27 years of use. For a 29 year price. Just wait for another downturn if you are so patient that you don't need anything for 2 years.

 

[jerseyduke]

what makes no sense to me are these stripped contracts (no points until 2015)??? I would sooner wait to see what happens with the market than wait 2 years for points or 1 year to borrow! Even those are going for the $80's!!

VERY good point! I find it hard to see the resale market going up much more

 

[twinsouvenirs]

I can't wait for Star Wars land

WDW... DO IT...This alone should convince my DH that we made the right call with regards to DVC

 

[tjkraz]

Correct me if I'm wrong, but doesn't foreclosed inventory belong to DVD, who then has to pay the dues on it? So if 25% of the inventory goes back to DVD and they haven't sold it to new owners yet, don't they owe 25% of the maintenance cost?

Is there some way out of it where they can foist the costs on the existing members? Perhaps by not foreclosing, just letting the past-due fees pile up?

If someone is not paying their dues, but has not yet been foreclosed on, I wonder who picks up those costs?

In the case of contract defaults, doesn't Disney usually take them back into their inventory? And in that case, doesn't Disney assume responsibility for the maintenance associated with those units?

There are two separate entities at work here: Disney Vacation DEVELOPMENT, who constructs and sells the units, and Disney Vacation CLUB who manages the timeshare properties.

Right now Disney Vacation Development IS actively foreclosing and reselling delinquent accounts. So all is well.

Problem is, Disney Vacation Development is under no obligation to do so. And if there comes a time where it's not in their best financial interest to foreclose, they may stop.

Meanwhile Disney Vacation CLUB still needs to keep each property solvent. They need to make sure that dues collections are sufficient to operate the resort. They can certainly take owners to collection and use every legal avenue available to compel owners to meet their obligation, but those efforts are costly (to the condo association) and not necessarily successful.

In short, as long as DVD feels it can re-sell the points or at least get some financial gains--even if it's just selling One Time Use points or giving the capacity to CRO for cash reservations--they will continue foreclosing. But if they stop foreclosures, owners stop paying and collections are difficult, remaining owners will be faced with a higher dues burden to keep the resort solvent.

The other possibility is that Disney keeps paying the bills for delinquent owners just because they have an image to maintain and rooms to rent to the general public. Possible...but not a certainty.

 

[NoleFan]

TOTALLY AGREE. I think it's practically lunacy. You are essentially giving your sellers 1/2 years free vacations on your points. You'd be better off paying a few extra dollars per point for a flush contract and then renting those to pay for part of the cost of the contract!

If your contract is 150 pts, and it's stripped till 2015, you are losing the use of a total of 300 points ($3,600 at 12/pt rental, today's rate). That is like giving your seller $3,600 extra. Even if you wouldn't rent them, you're still paying for vacations this year and next out of pocket that you woudn't have to otherwise.

The only argument you could make is that you are hedging against pt increases, but honestly, logically the net present value of the ttpoints should go down as the contracts age-- so with a super stripped contract, you are only buying 27 years of use. For a 29 year price. Just wait for another downturn if you are so patient that you don't need anything for 2 years.

PLUS, you are paying dues on those 2014 points when Disney bills you in December-January. Better be a cost concession for that as well.

 

[ELMC]

I don't think I would call it a "bubble" but if the 2008/2009 recession taught us anything, it's that timeshare prices are VERY succeptible to the state of the economy. Even DVC.

Given the current direct selling prices, availability of resale contracts, demand for resale contracts and value that can still be gleaned from a contract with 30 years remaining, there's nothing inherently wrong with today's resale prices.

But when those conditions change, prices are gonna drop. Quickly.

There WILL be another hiccup in the economy. Could be driven by something that's foreshadowed like the housing crisis or more unexpected like a terror attack. Could be 10 years away...5 years...2 years. But it will happen.

And when the economy struggles again, the DVC resale market is gonna be ugly. Especially for those 2042 resorts which will have little hope for recovery and low demand among buyers.

Isn't this the definition of a real estate bubble? Notice that I didn't say that the prices were artificially high, as I agree with you that they are probably correct based on current market conditions. That being said, I don't think that the current market conditions are sustainable (I could be wrong) which is what led me to classify the current resale market as being a bubble. Perhaps it's the terminology we disagree on, because from reading your post I can see that we agree that BWV for $85 a point is not a strong likelihood in the future.

 

[tjkraz]

That being said, I don't think that the current market conditions are sustainable (I could be wrong) which is what led me to classify the current resale market as being a bubble.

Well, if sustainability is the only criteria, all of DVC exists in a bubble. They will all eventually be valueless.

Perhaps it's the terminology we disagree on, because from reading your post I can see that we agree that BWV for $85 a point is not a strong likelihood in the future.

With VGF selling for $150 and others for $165, I see nothing inherently wrong with 29 years of BWV at $85.

That BWV price might be a little high when time value of money is taken into consideration. But one would also have to consider the value in booking a BWV Standard View at 11 months vs a much higher prices VGF or BLT room. Points go much further at BWV than many others.

If anything, BWV at previous rates of $55-60 seems significantly under-priced for the number of years of ownership remaining.

 

[Apps]

But this isn't a conversation about the Disney parks. It's about DVC. Star Wars will have very little baring on DVC. Marvel is absolutely useless in WDW as they can't build any attractions or use the characters.

I disagree. As long as Disney upgrades their parks and maintains their brand, it will keep DVC desirability high. Have you seen the Ironman exhibit at Disneyworld...its pretty nice

To me, DVC goes where the Disney parks/brand goes. Should Disney rest on their laurels and let the parks go, DVC value will go down with it. The only reason I even considered DVC was due to my kid's love of Mickey

 

[ELMC]

But one would also have to consider the value in booking a BWV Standard View at 11 months vs a much higher prices VGF or BLT room. Points go much further at BWV than many others.

You bring up a great point here, and one that often goes overlooked. A lot of times the value of owning DVC is the ability to parlay the potential savings along with the prime room booking categories. BWV Standard studios at 10 points a night are a ridiculously good deal and you're right, one needs to own there in order to take advantage.

If anything, BWV at previous rates of $55-60 seems significantly under-priced for the number of years of ownership remaining.

I would agree. Which is probably why I bought at those prices.

 

[chateau]

I would agree (with BWV prices being low at $55-60/pp). Which is probably why I bought at those prices.

Yeah, us too!

 

[sonofanarchy]

I disagree. As long as Disney upgrades their parks and maintains their brand, it will keep DVC desirability high. Have you seen the Ironman exhibit at Disneyworld...its pretty nice

To me, DVC goes where the Disney parks/brand goes. Should Disney rest on their laurels and let the parks go, DVC value will go down with it. The only reason I even considered DVC was due to my kid's love of Mickey

The only Iron Man stuff I saw was the monorail and a suit at Planet Hollywood. Disney has been resting on their laurels for quite some time. When was the last time Epcot got a new attraction, not just an "upgrade" from a previous attraction? How long has the yeti been broken for?
If Disney wants DVC to continue in the future, they need to up their game at the parks.