Actual Re-sale Savings

[Paul Stupin]

So, I calculated the CAGR per point per year for each resort based on Fidelity's resale data for 2017-2021 to extrapolate the projected price per point. Red highlights are when the price per point actually should start decreasing based on current trends. So, in theory, if you sell before the red, you may make a profit.

I understand the logic is that contract should lose value as they lose years, but that hasn't really borne out. DVC doesn't really appreciate/depreciate like a lot of other traditional investments.
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Makes sense to me that you could salvage some money getting out 8-10 years before expiration.

 

[Sandisw]

So, I calculated the CAGR per point per year for each resort based on Fidelity's resale data for 2017-2021 to extrapolate the projected price per point. These definitely aren't exact, but they kind of show the theory about when we could maybe expect an actual decrease in prices. Red highlights are when the price per point actually should start decreasing based on current trends. So, in theory, if you sell before the red, you may make a profit.

I understand the logic is that contract should lose value as they lose years, but that hasn't really borne out. DVC doesn't really appreciate/depreciate like a lot of other traditional investments.
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The problem is all those numbers apply to resorts who have 20 to 30 plus years left on them.

In 2035, there is no way ia BCV contract going to sell for more than a RIV contract, or sell for more than what it is today.

There simply won’t be a market for a product with 6 years left

 

[Jlo85]

The problem is all those numbers apply to resorts who have 20 to 30 plus years left on them.

In 2035, there is no way ia BCV contract going to sell for more than a RIV contract, or sell for more than what it is today.

There simply won’t be a market for a product with 6 years left.

Yeah, Riviera just started selling, so I only have a 0% CAGR for that. I would assume that will go higher, though we all know Riviera may be a special case. It may not appreciate at the same rate as other resorts have.

Also, I think people are missing inflation. All things being equal, these contracts will appreciate due to inflation regardless.

But yes, a lot of assumptions in this. Though most people are also assuming that contracts lose their value over time. BCV are BWV are clear examples that doesn't happen.

 

[Sandisw]

Yeah, Riviera just started selling, so I only have a 0% CAGR for that. I would assume that will go higher, though we all know Riviera may be a special case. It may not appreciate at the same rate as other resorts have.

Also, I think people are missing inflation. All things being equal, these contracts will appreciate due to inflation regardless.

I might agree if they had no expiration date but they do.

Buying a 2042 resort with less than 5 to 7 years left at even todays prices would cost someone more than just paying rack rate to Disney, because of the cost of MFs.

Anyone buying today who wants to hold it at least 10 to 15 years is certainly better off with RIV than they are with BWV and BCV.

 

[Jlo85]

Makes sense to me that you could salvage some money getting out 8-10 years before expiration.

Based on the chart, a lot of these resorts you may break even with ~3 years before expiration if you buy today.

 

[Jlo85]

I might agree if they had no expiration date but they do.

Buying a 2042 resort with less than 5 to 7 years left at even todays prices would cost someone more than just paying rack rate to Disney, because of the cost of MFs.

Anyone buying today who wants to hold it at least 10 to 15 years is certainly better off with RIV than they are with BWV and BCV.

Disagree. Inflation will increase rack rates as well. I don't think it's far-fetched to say buying 100 points at BCV for $53/point in 2041 ($5,300) is cheaper than what Disney will be charging rack for 100 points in 2041. DVC rental rates may even be at that point in 2041.

 

[Sandisw]

Disagree. Inflation will increase rack rates as well. I don't think it's far-fetched to say buying 100 points at BCV for $53/point in 2041 ($5,300) is cheaper than what Disney will be charging rack for 100 points in 2041. DVC rental rates may even be at that point in 2041.

Who would by a timeshare for one year when you can buy a different resort for say $100 a point and get another 25 years?

That’s my point. People don’t buy a timeshare for a one time trip and there will be so many other choices out for the buyer to choose from that will dry up demand.

Plus, you have to add in the MFs so it’s not just $5300..it’s going to be more than that for that one year.

Since we have never had a DVC resort get down to expiration we don’t know. But we do know that ROFR certainly helps a floor and once DVD stops that completely for those resorts, my bet is that sellers will begin dumping them for cheaper around the 10 year mark if they want any level of purchase price back.

Or they’ll hold them until they expire to just use or rent.

ETA. Just for reference..BWV opened at $62,75 a point in 1996.

I bought it in 2011 and 2012, for $53 and $55/point. It was in the $70s on the resale market when I bought into DVC at BRV for $74/point. in 2009.

So there have been times when the price did not rise, but fell.

 

[pianomanzano]

Disagree. Inflation will increase rack rates as well. I don't think it's far-fetched to say buying 100 points at BCV for $53/point in 2041 ($5,300) is cheaper than what Disney will be charging rack for 100 points in 2041. DVC rental rates may even be at that point in 2041.

Buying or selling with one or two years left on the contract makes no sense, even if the math says it will work out. Too much time wasted on ROFR and transfer, and don't forget closing costs and dues. And what happens when the seller (un)knowingly uses those points before the transfer (which is unfortunately occurring more often than should be). A seller is better off renting those points out at a premium before the resort expires and a buyer is better off buying a contract with more years on it.

 

[Paul Stupin]

Yeah, Riviera just started selling, so I only have a 0% CAGR for that. I would assume that will go higher, though we all know Riviera may be a special case. It may not appreciate at the same rate as other resorts have.

Also, I think people are missing inflation. All things being equal, these contracts will appreciate due to inflation regardless.

But yes, a lot of assumptions in this. Though most people are also assuming that contracts lose their value over time. BCV are BWV are clear examples that doesn't happen.

A contrarian viewpoint is always interesting, but BCV and BWV‘s value will start to go down at the decade mark, and I think the downward spiral will escalate once the five year clock starts ticking. I think the rack rate will determine the price, if anyone really is buying. Acquiring a contract so close to expiration will be like pre-booking 2-3 stays, for an amount where the combined point cost, closing costs, and dues are so low as to make the buyer’s effort worthwhile. Sounds like a huge pain to me.

What you’re also not considering is that one of DVC’s main selling points are the years and years of vacations open to DVC members. In your scenario that’s out the window too.

 

[beldred]

Buying or selling with one or two years left on the contract makes no sense, even if the math says it will work out. Too much time wasted on ROFR and transfer, and don't forget closing costs and dues. And what happens when the seller (un)knowingly uses those points before the transfer (which is unfortunately occurring more often than should be). A seller is better off renting those points out at a premium before the resort expires and a buyer is better off buying a contract with more years on it.

Yeah, I can't imagine anyone buying with just a handful of years left on the contracts. And this is from someone who just made an offer on a BCV contract. It'll be our first DVC and we debated this for the last couple of months.
We decided to go for BCV because my husband & son both loved the resort when we rented there in October. I did math for days. Yeah, it doesn't work out very well. But at $155 a point, we can get entry pretty cheaply on a small contract and squeeze enough points out of to visit for a couple of years and decide what else to buy. We will either run it all the way out enjoying our trips while having a slight savings, or sell it before the 10 year mark if we've decided we're good with another home resort.
Would my first choice of BLT been better? Yes, financially. But it's been major ROFR'd lately so would have cost more upfront and BCV makes my guys happy. If the BCV offer doesn't go through, I'll take it as a sign and push for BLT again. LOL

 

[Jlo85]

A contrarian viewpoint is always interesting, but BCV and BWV‘s value will start to go down at the decade mark, and I think the downward spiral will escalate once the five year clock starts ticking. I think the rack rate will determine the price, if anyone really is buying.

DVC will be attractive if there is a savings. That’s the whole reason for DVC. Whether there are 10 years left or 1 years left, if there is a savings, people will buy it.

Keep in mind that if we consider that DVC direct prices have grown at a 4.7% rate since inception, the direct price in 2041 will be $525/point. That leaves a lot of room for savings.

And a lot of customers want to save money upfront, which is why I think you see upward pressure on low price per point contracts, in addition to ROFR. A lot of people don’t have the money to pay $207/point. But they can afford $100/point.

 

[havoc315]

I think this math is a little faulty since it assumes a sale of RIV but not BCV. Current trends tend to indicate that 1) DVC resorts appreciate over time and 2) that appreciation accelerates towards the end of the contract. So at least based on current trends, it's likely that you could sell BCV close to expiration for a profit over what you paid (>$36K in your example).

??? No… as of 2042, BCV is worthless. Why would anyone pay $36,000 to get zero points? To get zero trips?

We can state with nearly absolute certainty that BCV will be worth $0 in 2042, and just barely above $0 in 2041.

 

[havoc315]

Disagree. Inflation will increase rack rates as well. I don't think it's far-fetched to say buying 100 points at BCV for $53/point in 2041 ($5,300) is cheaper than what Disney will be charging rack for 100 points in 2041. DVC rental rates may even be at that point in 2041.

That’s why I explicitly used 2022 dollars to correct for inflation.

If inflation takes you to the point in 2042, where rental rates are $53 per point… where someone would pay $5300 for a 1-time trip of a few days at BCV… then a 2060-2070 resort will be re-selling for $500+ per point.

It’s not like BCV will get $53 per point in 2041 for a 1 time trip, and Riv will only get $144 for 29 more trips.

So once again, the longer contracts are effectively much cheaper than any of the 2042 contracts.

 

[Jlo85]

That’s why I explicitly used 2022 dollars to correct for inflation.

If inflation takes you to the point in 2042, where rental rates are $53 per point… where someone would pay $5300 for a 1-time trip of a few days at BCV… then a 2060-2070 resort will be re-selling for $500+ per point.

It’s not like BCV will get $53 per point in 2041 for a 1 time trip, and Riv will only get $144 for 29 more trips.

So once again, the longer contracts are effectively much cheaper than any of the 2042 contracts.

My position is that:

1. Longer contracts probably only save money if you intend to never sell and let the contract expire. Even then, dues matter more than the price per point. Aulani subsidized is going to be cheaper than Riviera despite shorter length.
2. History suggests an inverse relationship between price and years left. BCV cheapest listing today is $6.36 per point per year left resale while Riviera is $2.67 resale. That is what I am getting at. BCV will likely be reselling for a higher price per point per year left in 2041 than Riviera will be. So, in theory, selling BCV towards the end of the contract and buying another resale at a new resort with a lower price per point per year left would be the best financial move.

 

[FlynnRiderSwitch]

Only in upfront costs. In a full calculation of value, redemption value, lost opportunity cost, etc... Beach Club re-sale is far more expensive than Riviera.

This is oversimplification, but very very generally... Imagine you're buying 200 points, to use for 19 years (until 2042 expiration):
At incentivized 188 per point, plus closing, you would pay about $39,000 for Riviera.
August 2022 re-sale of Beach Club was reported at $174 per point. With closing costs, about $36,000.

Now, let's do 19 years of ownership, using 2022 dollars:

Beach Club: $28,637 in dues
Riviera: $31,859 in dues

Now, let's do redeemed value in 2042 (re-sale value):
Beach Club -- $0 return
Riviera (using current 2022 dollars): Approximate $28,000 return

Total cost through 2042: Beach Club: $64,637
Riviera: $42,859

Thus, over the same period of time, Riviera works out to be $20,000 cheaper than Beach Club. It isn't even close.

This is why the 2042 resorts tend to be such bad value, and so overpriced.

(The least overpriced is Boulder Ridge, but even Boulder Ridge works out to about $14,000 more expensive than Riviera).

Now, this is a bit of oversimplification. If we add in lost opportunity costs, it narrows the difference slightly, but not nearly enough to wipe it out. Then there are unknowns. But this is really the best estimate based on known factors. (unknown, a tornado could hit Beach Club wiping out its value... global warming could make Orlando unlivable, destroying all DVC value starting in 2035, etc).

You make a lot of sense, prior to our BWV purchase this year I always looked at buying DVC as an investment that I could sell in the future (not necessarily WAS going to sell it down the road but wanted the option to) and recoup my money, and maybe even make a little money out of it. Poly, BLT, CCV, even Aluani subsidized we considered for purchase but in the end the location the of BWV won out over the others. BWV is more of a purchase than an investment but we were ok with that in the end because of our love and convenience for that area. Boy I wish Disboards had a spellchecker!

Who knows maybe the future holds for us another resale contract

 

[Ruttangel]

I mean it's all a risk, 2070 is a very long way away to expect the world to function the way it does today.
I would expect a Theme Park on the moon by then

 

[pianomanzano]

I would expect a Theme Park on the moon by then

Think that was one of the concepts being pushed yesterday at D23 lol

 

[Sandisw]

My position is that:

1. Longer contracts probably only save money if you intend to never sell and let the contract expire. Even then, dues matter more than the price per point. Aulani subsidized is going to be cheaper than Riviera despite shorter length.
2. History suggests an inverse relationship between price and years left. BCV cheapest listing today is $6.36 per point per year left resale while Riviera is $2.67 resale. That is what I am getting at. BCV will likely be reselling for a higher price per point per year left in 2041 than Riviera will be. So, in theory, selling BCV towards the end of the contract and buying another resale at a new resort with a lower price per point per year left would be the best financial move.

But doesn’t this assume that there are no changes to the program for that resort?

They may have removed it from BVTC by then. There could be no banking and borrowing for those resorts.

And, their is no guarantee for the new buyer they will actually be able to use those points once closed since they can’t secure a room with them until they are an owner.

Whose going to risk that type of situation at that point? I think finding buyers to invest that much money will be difficult and I would be there will be lots of sellers who dump those contracts a few years out for cheap just to get rid of the last few years of MFs.

And, as long as their are sellers out there willing to give it away..and there will be..then getting anything like that will be tough.

 

[FlynnRiderSwitch]

Yeah, I can't imagine anyone buying with just a handful of years left on the contracts. And this is from someone who just made an offer on a BCV contract. It'll be our first DVC and we debated this for the last couple of months.
We decided to go for BCV because my husband & son both loved the resort when we rented there in October. I did math for days. Yeah, it doesn't work out very well. But at $155 a point, we can get entry pretty cheaply on a small contract and squeeze enough points out of to visit for a couple of years and decide what else to buy. We will either run it all the way out enjoying our trips while having a slight savings, or sell it before the 10 year mark if we've decided we're good with another home resort.
Would my first choice of BLT been better? Yes, financially. But it's been major ROFR'd lately so would have cost more upfront and BCV makes my guys happy. If the BCV offer doesn't go through, I'll take it as a sign and push for BLT again. LOL

Cant beat being able to walk back to BCV or BWV passing that immense line to the skyliner. Same with BLT, convenience is so important on your vacation.

 

[Jlo85]

But doesn’t this assume that there are no changes to the program for that resort?

You bear those same risks with a long-term contract like Riviera.

And I’m not saying sell your 2042 contracts in 2041. I’m more just saying that because of the upward pressure of cheaper upfront prices and ROFR, 2042 contracts are likely going to be more expensive on a per year basis than a 2070 contract. And that difference is likely to increase exponentially as we get closer to expiration, at least it has so far.

My basic premise is that I think it’s unfair to say RIV is definitely a better long-term value than BCV Or BWV. History doesn’t support that.