Will DVC value bounce back?

[mla973]

DH and I owned at BWV for a few years. We bought a resale contract in 2008 and sold it in 2010 (housing market tank forced us to sell). We paid $84/pt and sold for $84/pt.

We are interested in possibly purchasing again. I see many contracts available via resale below this value, and in some cases, well below this value. I realize that one should purchase in at a resort that they most plan to stay... however, I'm finding it difficult to not consider VB when it's going for $40/pt (saw one that passed for $33.50). In comparison, BLT is listed at $103 via resale.

Since all of the perks are the same (when buying resale... I realize not the same as buying through DVC directly), it seems crazy to pay so much more for one resort over another. I know the booking windows are different, but the cost difference is really making me question what we might want to purchase now. If contracts are still renting for $12/pt (or so), regardless of resort, I don't understand where the value becomes worth it.

Thoughts on the current value or resale contracts, and whether or not we'll see them rise in the next few years, particularly as less inventory is available?

 

[Smile&Nod]

Because my priority is a vacation AT Disney, I was not comfortable buying at VB or HH - I wanted to ensure that when I wanted to vacation I could book at the 11 month window and be pretty much assured that I would be able to get into my home resort. If that is not your normal vacation mode and you are willing to take your chances on getting in at the 7 month mark, and if you usually go during the off season you are probably fine. I actually originally bought at BWV even though I preferred BC - just this past spring i bought a second contract at BC because that is where i really want to be. Comes down to personal choice.

 

[JimMIA]

No, I do not think you will see a rise in resale prices. Prices have been impacted by the economy, certainly, but that's not the only reason

The economic impact is because caused by less discretionary income (household income has gone DOWN in recent years, as prices have risen) and also because many folks were forced to sell like you were, which created additional supply.

In addition to that, because DVC is a fixed-term timeshare, the intrinsic value of the points decreases as the useful term of the contract decreases.

And there is also the general perception that timeshares are basically worth zero on the resale market. That's neither entirely true, nor true of DVC, but it's kind of a general negative opinion that hangs over the marketplace and affects all prices to some degree.

 

[mla973]

With resale prices so low, I don't know how Disney is selling anything directly.

I realize that the term of the contract is something to consider... as is location. We owned at BWV, but I prefer BCV.

Thanks for the thoughts. It just seems as if point rental prices are holding steady, but actually purchasing DVC contracts are not. I realize that each year of a contract, that value diminishes as the lifespan is lessening.

I guess I just can't figure out if this is the right thing for us. With all of the promotions (free dining, etc.), DVC is a tougher sell for me than it used to be.

 

[JimMIA]

I also don't think most prospective buyers really appreciate just how much the resale prices have declined in recent years. Here's an actual example:

I purchased SSR in 2005, for $83.33 per point. I sold that contract in 2011 for $62 per point. Deducting the 10% sales commission ($6.20), I had a net of $55.80 per point. That's a loss of $27.53 per point in 6 years -- a 33% loss.

[Note two things: 1) I got a considerably higher price than many sellers, and 2) SSR is currently selling for WAY less -- looks like around $50, although there is considerable variation in prices]

*****
If we want to speculate a little, when you look at buying direct today the numbers are REALLY desperately BAD.

For example, if you buy BLT direct the current price is $165 with a maximum incentive of $12 per point. So if you buy the required number of points for max incentive, you are paying $153 per point. BLT is currently selling and clearing ROFR at $90 or less on the resale market.

So the day you close on a BLT direct contract, you can figure you've lost about $72 per point ($153-$90-10% commission of $9 per point).

If BLT follows the pattern SSR followed above (and I think that's a valid assumption), you would figure that BLT prices would go down 33% in six years. So six years from now you'd expect to net $60-$6 = $54. In other words, in six years, you'd lose almost $100 per point from your original purchase price (direct at maximum incentive = $153)!

 

[Smile&Nod]

I never really figured in the resale value (or loss there on) in deciding if it was the right thing to do - I figured out what the purchase of DVC would save me over the same accommodations in the coming year - and looked to see how long it would take to "break even". We stayed at different villas even before we owned DVC because we liked the space. so if you consider one week per year at retail price how long would it take to break even on the purchase price - it made sense for me because on my original contract I could break even after about 5 trips - then the rest of the years on the contract I was way ahead.

The rental points i think are holding steady because the retail prices are not dropping. If you are comfortable staying at a moderate or value resort then the above break even point is very different.

 

[chalee94]

however, I'm finding it difficult to not consider VB when it's going for $40/pt (saw one that passed for $33.50)...it seems crazy to pay so much more for one resort over another. I know the booking windows are different...

you roll the dice and take your chances, i guess. it's a good plan if you want to stay at VB but remember that this could be you in a few years:

Frustrated New DVC Member

My husband and I have been members for 2 years now and we are incredibly frustrated by how hard it is to get reservations without planning 9 to 11 months in advance...

SSR is a pretty large resort, so that should usually be an option at 7 months out, but BLT at 7 months can be a lot more hit-or-miss...there's a reason that VB and HHI resales are cheaper...

 

[drusba]

I would assume that the kind of resale prices you are seeing are likely to be around for some time even if we get that continuous, very slow improvement in the economy that Democrats are are taking credit for and trying to spin as something as great as the invention of sliced bread. We have now reached the threshold for the resorts that end in 2042 for which buyers have to have second thoughts about buying because of the end date and thus it is questionable those can improve at all even if the economy does miraculously improve significantly within the next few years.

Nevertheless, if you are considering buying to stay at WDW I would have second thoughts choosing VB over a WDW resort. VB has the highest annual dues (almost $3 more per point than SSR) and that can make it far more expensive in the long run than some WDW resorts, particularly SSR or OKW which have fairly low resale prices now. Moreover, best value, if you don't need 11 month window, goes to SSR in that situation because it has a 2054 end date.

 

[Brian Noble]

With resale prices so low, I don't know how Disney is selling anything directly.

Timeshare is not a product that is *bought* so much as it is *sold*. The vast majority of timeshare buyers do so while they are on vacation, having done little to no research in advance, and with essentially no understanding of the secondary market. Timeshare is also typically an "aspirational purchase"---and that's especially true for the name-brand developers. In other words, most people feel good about the fact that they were able to buy such a thing, aside from whether or not the thing itself is something they want. So, after the deal is signed, most folks don't go looking for reasons why the purchase was a bad idea.

Indeed, we often see people at TUG or TS4M who, when faced with the inescapable fact that their purchase is worth NOTHING, still don't want to rescind. They don't want to have been that wrong about something that seemed like such a good idea.

The various resale restrictions further muddy those waters---even though they are almost never material to the value of a developer purchase, they still give buyers another reason not to rescind and buy resale.

It's only the educated customer who gets it. For grins, talk with people around the pool some day about how the market for DVC works, and you'll get a sense for how small that segment is.

 

[JimMIA]

I never really figured in the resale value (or loss there on) in deciding if it was the right thing to do - I figured out what the purchase of DVC would save me over the same accommodations in the coming year - and looked to see how long it would take to "break even". We stayed at different villas even before we owned DVC because we liked the space. so if you consider one week per year at retail price how long would it take to break even on the purchase price - it made sense for me because on my original contract I could break even after about 5 trips - then the rest of the years on the contract I was way ahead.

IF you actually would (or did) pay retail price for a DVC villa, that is a valid comparison -- with the caveat that it also assumes you will hold your DVC contract to expiration, AND you have included your acquisition costs. I did a similar comparison, using about $2 per point acquisition cost per point + about $5 per point MF for a point cost of about $7.

Two howevers, however:

If a prospective buyer would really NOT pay retail price for a DVC stay, the comparison is a phony exercise designed to give the answer they want. To properly evaluate, you have to compare what you really would DO as an alternative.

The second however is reality. In my example, I assumed (you know what that does to you and me...right?) that I would hold that SSR contract to expiration. But in the real world, I didn't. I sold it six years later, with a net loss (or cost) of $27.53 per point. So my acquisition cost was not $2 per point -- it was about $4.59 per point.

Therefore, although I had assumed my points would be costing me about $7 per point to use, they actually cost me $9.59 per point to use. BIG difference, and one that will turn your "break even" or "savings" equations inside out!

 

[GOOFY D]

We are interested in possibly purchasing again. I see many contracts available via resale below this value, and in some cases, well below this value. I realize that one should purchase in at a resort that they most plan to stay... however, I'm finding it difficult to not consider VB when it's going for $40/pt (saw one that passed for $33.50). In comparison, BLT is listed at $103 via resale.

Not sure if it makes a difference to you, but we just bought BLT at $80.

 

[tomandrobin]

No....timeshares in general, will gradually lose their value over time. The real estate market and overall economy is a mess, and another economic slow down is 6-9 months away.

 

[Mississippian]

DH and I owned at BWV for a few years. We bought a resale contract in 2008 and sold it in 2010 (housing market tank forced us to sell). We paid $84/pt and sold for $84/pt.

We are interested in possibly purchasing again. I see many contracts available via resale below this value, and in some cases, well below this value. I realize that one should purchase in at a resort that they most plan to stay... however, I'm finding it difficult to not consider VB when it's going for $40/pt (saw one that passed for $33.50). In comparison, BLT is listed at $103 via resale.

Since all of the perks are the same (when buying resale... I realize not the same as buying through DVC directly), it seems crazy to pay so much more for one resort over another. I know the booking windows are different, but the cost difference is really making me question what we might want to purchase now. If contracts are still renting for $12/pt (or so), regardless of resort, I don't understand where the value becomes worth it.

Thoughts on the current value or resale contracts, and whether or not we'll see them rise in the next few years, particularly as less inventory is available?

FWIW my story is almost identical to yours. We owned two contracts at BWV, sold one for a profit and one for a loss around 2009, but cash was tight and we needed money. We're now looking at repurchasing.

I would never consider staying at SSR for a WDW theme park trip (but would overnight if going to Miami for a cruise since park proximity wouldn't matter) and would only stay at OKW if in a Grand Villa. So there's no need to buy SSR, because if I can't get a room somewhere else it's the same as owning at Vero. I'm going to try to offer $32 or $33 on some Vero points and see what happens; they have ROFR'd at $30. If I can't buy Vero, then I likely want BWV again so I can book the standard view rooms.

The Vero points would actually have value to me as I might at some point want to book the beach cottage. I really like Vero and suspect if more owners visited they would, too.

We visited WDW a lot when the kids, now 13 and 12, were younger, and they've made it clear they would rather go on a cruise than to WDW. I figure when they get a little older and are allowed to take a friend that will change a lot of things since they will be old enough to go places on their own. So I'm taking my time, looking for a deal. Maybe I'll see you at Vero!

 

[WilsonFlyer]

OK. I guess I always have to be contrary.

I think when the economy recovers and the resale market dwindles back to more normal selling levels, we will see resale prices reconverge back closer together for all resorts, which will likely mean a rise in cost of the now lower priced resorts. I think market prices are skewed right now because of the dumping going on for people having to get out for one reason or another.

I think there are some real bargains out there right now on the resale market, and if I had the cash laying around, I would be sucking up several hundred points right now. As it turns out, the economy has taken a toll on me too and I just don't feel like it's a good place to dump funds right now. My gut tells me that it actually is a good investment right now, given the low pricing, especially at SSR and OKW. That investment takes a leap too though because it bets on the continued viability of the rental market. That too will change as the American economy recovers, IMO.

With resale points renting for around $12, it doesn't take long to recoup one's investment at a $50/point resort, even given annual dues. After 4-5 years, it's all profit except for the dues off the top.

 

[com_op_2000]

Due to end of use dates on each contract, the value will always go down.
Check the MFs of VB, they are the highest of any DVC resort.

 

[Deb & Bill]

We bought BCV in the low $70's and sold it for the mid $90's. It will never happen again that way. So we're just happy going for a visit until we decide to sell it all.

 

[DebbieB]

I would not buy Vero. The dues are the highest and with it's coastal location there's always a chance it could get damaged by a hurricane and taken out of the DVC system. Plus it's 2042 expiration.

 

[Dean]

DH and I owned at BWV for a few years. We bought a resale contract in 2008 and sold it in 2010 (housing market tank forced us to sell). We paid $84/pt and sold for $84/pt.

We are interested in possibly purchasing again. I see many contracts available via resale below this value, and in some cases, well below this value. I realize that one should purchase in at a resort that they most plan to stay... however, I'm finding it difficult to not consider VB when it's going for $40/pt (saw one that passed for $33.50). In comparison, BLT is listed at $103 via resale.

Since all of the perks are the same (when buying resale... I realize not the same as buying through DVC directly), it seems crazy to pay so much more for one resort over another. I know the booking windows are different, but the cost difference is really making me question what we might want to purchase now. If contracts are still renting for $12/pt (or so), regardless of resort, I don't understand where the value becomes worth it.

Thoughts on the current value or resale contracts, and whether or not we'll see them rise in the next few years, particularly as less inventory is available?

I doubt you'll see much increase in the existing resorts but you might see a blip or 2 as the economy recovers or there are increases in retail prices. Without active ROFR prices will be more variable and there will be bargains. If DVC makes sense, I'd buy it. My feeling is one should be the cheapest resort (accounting for variables) that one will be happy staying at most trips. Because of a lack of 11 month window and maint fees, I don't see the risk/compromises with HH/VB as being worthwhile to use at DVC. My view is that one would need to be at or under $25 currently for the risk to be worthwhile, even then only for those comfortable at being under 7 months out.

 

[Mississippian]

Due to end of use dates on each contract, the value will always go down.
Check the MFs of VB, they are the highest of any DVC resort.

You are right that the VB dues are higher, but $1.50 to $2 per year. But if you can buy the VB contract for $30 less than another contract, then it will essentially take forever to catch up. I'm not sure when, accounting for interest, it ever will.

Once the expiration date of a contract drops below 30 years then the fact that it is going to expire into nothing starts to be a factor. But, at this point it is still a small factor. The EPCOT resorts and so much better than the Siberia resort that I don't think the earlier expiration date will hurt until about the year 25 mark.

 

[DVC SSR Owner]

We bought 200 points at SSR about 2 years ago for $55 pp resale with no closing fees. We have yet to stay there. We have been to BCV, VB, HHI, and have a dream cruise booked on points next June. We have never had a problem getting exactly where we want. We travel in May and June and I call right at the 7 month mark. Do you travel off peak times? That may be a factor! Good luck!