Poll: Has the 2042 Bubble Burst?

[jason423]

It would depend on where the prices land for this particular report. Even if trending down, going by last month they are still very overpriced based on years remaining. I think it is fair to comp OKW with SSR based on desirability and the price per year there is about $4.63for OKW ($88/pt for 19) and $3.48 for SSR ($108/pt for 31). I think for the bubble to truly burst you would need to get those two resorts virtually equal which would mean a per point price of about $66 for OKW. If you adjust the other 2042s based on last months percentage above OKW (basically the premium paid for a "more popular location) it would require prices around $77 for BRV, $96 for BWV and $108 for BCV. As long as they are above those marks they are still overpriced. Maybe that is tightening from a few years (months?) ago but I wouldnt say its burst.

 

[Epcot Forever Forever]

Working on this month's DVC Resale Average Price blog, and I've noticed a startling trend with some of the 2042 resorts... In fact, Old Key West - Extended average pricing is now trending at or above BoardWalk, Beach Club, Boulder Ridge, Hilton Head, and Vero Beach.

So - Has the 2042 bubble burst with 19 years now left on the contracts? Look forward to everyone's thoughts!

Yes - it burst almost a decade ago when Poly and VGF found higher resale prices than BWV and BRV despite wildly worse point charts, and REALLY burst ~5 years ago when BLT became more expensive than BWV.

The 2042s have been slowly drifting away from the 2054+ resorts ever since. I’m not sure anything has really changed recently, it’s just more of the same trend.

 

[Epcot Forever Forever]

So my opinion is "No", and I doubt it will every be an immediate burst.

If you think about where these resorts SHOULD be priced, it should sort of be based on the sales of resorts that are near 50 years. A great place to make this comparison is with Copper Creek and Boulder Ridge.

Copper Creek runs in the $150 average price while Boulder Ridge is running in the high nineties, lets call it $95 per point.

If we consider Copper Creek with 45 years left and Boulder Ridge with 19, all else being equal you are paying $3.33 / point / year for Copper Creek and $5 / point / year at Boulder Ridge.

Boardwalk is similarly going at $115 a point and Beach Club around $140 a point versus say BLT at $160 per point. That puts Beach Club at $7.27 / point / year and Boardwalk at $6.05 / point / year vs BLT at $4.32 / point / year.

Even OKW 2042, while running at some of it's lowest price in years, seems to still be around $90 / point, or $4.73 per point. That's comparable to direct pricing of Riviera, which at $217 is $4.62 per point.

So while these prices have settled down a bit, they are still inflated against what the market SHOULD be.

I look at the less favored resorts should be running around $3.50 / point / year remaining, while more favored resort are around $5.00 / point / year remaining. IMO Beach Club and Boardwalk should really be priced around $100 per point, while OKW and Boulder Ridge should be closer to $70 per point IMO. So I don't think we have yet reached a point where the bubble burst.

I would really expect we will see a steep drop in prices for these resorts in the next 10 years, but it wouldn't surprise me if they stay inflated due to people wanting bargains. In all honestly, I've been saying for a while, if my Boardwalk contract is still worth near $100 a point with 10 years to go, I will sell it and take the cash and buy at a longer lasting resort. (I paid $105 / point in 2017.) By 2032 these resorts SHOULD be selling for $60-70 per point.

Those discrepancies shrink meaningfully if you assume even a small cost of capital.

At 3.5%, the 2042 resorts have the equivalent of 13.5 years left (that’s the number to use in the denominator vs the $/pt), but SSR works out to 18.6 years left and BLT to 20.6 years.

So $160 /20.6 = $7.76/pt for BLT and $115 /13.5 = $8.52/pt vs BWV - still a small premium (10%), but not the 40% markup you get if you straight line it.

 

[intamin]

I think it’s popped in the sense that I don’t see things going back up, even if the economy does. I think we will now see a slow decline in these resorts over the next 10 years and then see it drop faster after that.

Agreed with this. At this point for BCV and BWV it's basically going to be a slow deflation and then they'll drop like a rock. The fact that they're both still selling at over 100+ per point with BCV still going for the 130s says a lot about the resorts and they the bubble definitely hasn't burst quite yet paired with owners wanting to resist the decline in value. For a brief second we saw BWV go in the 90s but it went back up to low 100s after that.

 

[HyperspaceMountainPilot]

There’s a lot of great analysis in this thread, but I still don’t think most people are realizing that the cost per point raw calculations also needs to take in the fact that each point goes a lot further at BCV/BWV than RIV/Poly/VGF.

I am staying at BCV over holiday break in a 1bed and the dollar equivalent is more than $30/pt, maybe $25/pt with an aggressive discount. If you pay $125/pt for BCV, you’ve essentially paid back your purchase price in about 8 years (accounting for time value of money and conservatively assuming no more hotel price hikes that outpace dues). For that reason (assuming no new resorts are built on crescent lake), I think BCV and BWV are not a bubble at all, and (absent economic catastrophe) will likely stay above $75 through the rest of this decade, I think BCV is even higher than that because it’s a small total number of points.

As for me personally, I bought in this summer at $115 (stripped of ‘23 points) and if I sold in a decade at $50 (not planning to sell voluntarily), I would be thrilled to have paid $115/pt, extracted about $200/pt (net of dues) and still have $50/pt left in value. I would be surprised to see them go below $50/pt before 2038, because it’s quite easy to get $10/pt/year net of fees with minimal effort, and you can get more than 2x that value by using them or renting them yourself.

If either BCV or BWV gets below $75 in the next few years I will be loading up on points and enjoy a glorious 15 years as a DVC Tycoon.

 

[DanCali]

So - Has the 2042 bubble burst with 19 years now left on the contracts? Look forward to everyone's thoughts!

With all the love here I'm just about to just on the bandwagon add my "7th mug" involving a certain 2042 "Epcot resort" - so I would hope not!

I do think prices will decline, but it will probably be a steady decline rather than a "crash". I also think we'll continue to see the price/year for these resorts go up over time. For example, if BRV is currently selling for around $100 with 18 years to go ($5.55/year) it may be $90 in 3 years ($6/year with 15 years to go), $70 in 8 years ($7/year with 10 years to go) and and perhaps $40 in 13 years ($8/year with 5 years to go). If this math materializes, which is a big "If," the current BRV owner loses $60 over 13 years, which is about $4.60/year rather than $5.55/year.

VB, HHI, OKW, and BRV aside, the way I've evolved my thinking about owning an "Epcot/HS Resort" is:

1) I can buy Riviera Direct and lose $50-$60/pt in "equity value" with 100% certainty just 10 days later, and maybe much more over time. To me, as much as we love the resort (and we do), that's a deal breaker. I'd rather try my luck at 7 months out or via waitlist using our direct points.

2) I can buy Riviera resale, but at current prices I might lose another $30-$50/pt if prices settle much lower in 6-8 years. I have my opinions, but nobody knows where things will end up. Moreover, that type of ownership would be highly inflexible with the resale restrictions, but at least it'd last for my great-grandkids to possibly enjoy one day. We already have plenty of direct and O14 points, so I generally am ok with this option, but I'd want to wait 6-8 years to be comfortable that supply is steady and I'm paying the actual "going rate".

3) I can buy a resale 2042 resort. I do think those are overpriced at current prices, but for these resorts I'm just a price taker. I will most likely lose 30-$50/pt in 6-8 years but I can live with that if it's a modest number of points and I get to enjoy them in my prime years before we are empty nesters. At that point I can decide whether to keep the points to expiration or swap/tradeup for Riviera resale which should have a robust resale market by then.

 

[CastAStone]

There’s a lot of great analysis in this thread, but I still don’t think most people are realizing that the cost per point raw calculations also needs to take in the fact that each point goes a lot further at BCV/BWV than RIV/Poly/VGF.

I am staying at BCV over holiday break in a 1bed and the dollar equivalent is more than $30/pt, maybe $25/pt with an aggressive discount. If you pay $125/pt for BCV, you’ve essentially paid back your purchase price in about 8 years (accounting for time value of money and conservatively assuming no more hotel price hikes that outpace dues). For that reason (assuming no new resorts are built on crescent lake), I think BCV and BWV are not a bubble at all, and (absent economic catastrophe) will likely stay above $75 through the rest of this decade, I think BCV is even higher than that because it’s a small total number of points.

As for me personally, I bought in this summer at $115 (stripped of ‘23 points) and if I sold in a decade at $50 (not planning to sell voluntarily), I would be thrilled to have paid $115/pt, extracted about $200/pt (net of dues) and still have $50/pt left in value. I would be surprised to see them go below $50/pt before 2038, because it’s quite easy to get $10/pt/year net of fees with minimal effort, and you can get more than 2x that value by using them or renting them yourself.

If either BCV or BWV gets below $75 in the next few years I will be loading up on points and enjoy a glorious 15 years as a DVC Tycoon.

It’s a great point. It has been pointed out on these boards before that a standard view BWV studio on the right day can have a redemption value as high as $70 per point.

I wouldn’t use that as my expected value but you certainly aren’t getting that at VGF.

 

[DanCali]

I am staying at BCV over holiday break in a 1bed and the dollar equivalent is more than $30/pt, maybe $25/pt with an aggressive discount. If you pay $125/pt for BCV, you’ve essentially paid back your purchase price in about 8 years (accounting for time value of money and conservatively assuming no more hotel price hikes that outpace dues). For that reason (assuming no new resorts are built on crescent lake), I think BCV and BWV are not a bubble at all, and (absent economic catastrophe) will likely stay above $75 through the rest of this decade, I think BCV is even higher than that because it’s a small total number of points.

My biggest issue with that analysis (which is fine mathematically) is that I've seen rack rates used too many times in aggressive sales pitches at other timeshare companies in order to justify the retail prices. Yet resale prices for those resorts are often at a 60%-90% discount to the retail prices, so something is off. I suspect that most people who would gladly own BWV/BCV just wouldn't really pay the $30/pt alternative cash rate and maybe view a direct rental from an owner (in the DVC case say at $18-$20/pt) as a fairer comparison. With dues getting close to $9/pt now your payback period becomes about 12-14 years. Still less than 18 years, but it's well over 8 years.

 

[HyperspaceMountainPilot]

My biggest issue with that analysis (which is fine mathematically) is that I've seen rack rates used too many times in aggressive sales pitches at other timeshare companies in order to justify the retail prices. Yet resale prices for those resorts are often at a 60%-90% discount to the retail prices, so something is off. I suspect that most people who would gladly own BWV/BCV just wouldn't really pay the $30/pt alternative cash rate and maybe view a direct rental from an owner (in the DVC case say at $18-$20/pt) as a fairer comparison. With dues getting close to $9/pt now your payback period becomes about 12-14 years. Still less than 18 years, but it's well over 8 years.

You are probably right that *if you could rent points* at the exact times you want at BCV/BWV and compare with that your break even point would be much further out in the future—but I am actually a BCV fanatic who has tried several times to rent BCV around Thanksgiving, Christmas, New Years over the past 5 years and failed. In 2019, we paid about $2000/night (in 2019 dollars!) cash rate to Disney for a Beach Club 2 bedroom villa. My personal experience is that it is quite challenging to rent points when I want them, so I’m getting a huge value, even compared to the current Disney+ promotion, and I’m not even trying to pick dates to maximize point value. I believe BWV is similar, but I have made fewer (though more than zero) failed attempts to rent there.

I’m not arguing that BCV or BWV are better values than many of the sleep around points you can buy for WDW area resorts—but if you love them and want to stay there no matter what, the current price is not a bubble.

I’m less familiar with the non-Crescent lake 2042 resorts.

 

[Ruttangel]

Ok, so BCV is $127, what was the average contract size, what was the total number of years worth of points, i.e. Stripped/loaded?
Anything under 150 likely to have a larger resale value.

Even so, they are great numbers in this low ROFR market.

One thing that could kill off BCV/BWV is dues increases, it’s why OKW-2042 is very poor as a SAP contender.
The resort that seems protected on dues is BRV.

 

[sethschroeder]

'm generally of the opinion that the 2042 resorts are overpriced. When I was in the market to buy, I created a big spreadsheet calculating $/lifetime_points, how far each point gets you with respect a night in a room in the home resort, annual dues, etc. The raw numbers didn't look very good for the 2042 resorts.

Did you account for booking at your home resort regularly while others couldn't get a room many times during the year?

The value to the 2042 contracts is booking at the resort itself on those historical point charts that are much cheaper in comparison to RIV or MK resorts.

 

[DanCali]

I am actually a BCV fanatic who has tried several times to rent BCV around Thanksgiving, Christmas, New Years over the past 5 years and failed.

I'm curious when you tried to do this? Did you look for owners with confirmed reservations 2-4 months before you wanted to go? Or did you look for someone to make a reservation on your behalf 11+ months in advance (the same time frame you need to work with as an owner). I may be missing something but I would think that if you worked with an owner 11+ months in advance to try and secure a rental, then availability wouldn't be that much different from what you experience as an owner.

 

[DonMacGregor]

The value to the 2042 contracts is booking at the resort itself on those historical point charts that are much cheaper in comparison to RIV or MK resorts.

For example, if BRV is currently selling for around $100 with 18 years to go ($5.55/year) it may be $90 in 3 years ($6/year with 15 years to go), $70 in 8 years ($7/year with 10 years to go) and and perhaps $40 in 13 years ($8/year with 5 years to go). If this math materializes, which is a big "If," the current BRV owner loses $60 over 13 years, which is about $4.60/year rather than $5.55/year.

3) I can buy a resale 2042 resort. I do think those are overpriced at current prices, but for these resorts I'm just a price taker. I will most likely lose 30-$50/pt in 6-8 years but I can live with that if it's a modest number of points and I get to enjoy them in my prime years before we are empty nesters.

Exactly why the majority of our WDW points are at BRV and BCV.

 

[HyperspaceMountainPilot]

I'm curious when you tried to do this? Did you look for owners with confirmed reservations 2-4 months before you wanted to go? Or did you look for someone to make a reservation on your behalf 11+ months in advance (the same time frame you need to work with as an owner). I may be missing something but I would think that if you worked with an owner 11+ months in advance to try and secure a rental, then availability wouldn't be that much different from what you experience as an owner.

You are correct that I was typically not trying to book 11+ in advance, but sometimes was looking 7+ months. Sometimes last minute as well. BCV isn’t quite as crazy as VGC, but it’s hard to get an entire trip block at popular times even before the 7m window. It’s also my understanding that BCV points cost more than $20/pt 11mo in advance.

 

[Cyberc1978]

You are correct that I was typically not trying to book 11+ in advance, but sometimes was looking 7+ months. Sometimes last minute as well. BCV isn’t quite as crazy as VGC, but it’s hard to get an entire trip block at popular times even before the 7m window. It’s also my understanding that BCV points cost more than $20/pt 11mo in advance.

I see BCV go for around $23-$26 pp and BWV for round $24-$27 pp. Sometimes there are outliers that goes cheaper.

Except for maybe VGC none of the other resorts go for that much, and for good reason - point charts are low actually quite a bit lower compared to many of the newer resorts so rooms are cheaper.

IMO I don't see a burst or crash in pricing for the 2042 but they have been lower compared to Covid season.

 

[disneylandtour]

Could you say that OKW Extended is overpriced? Maybe thats the question to ask.

Also not seeing it here:
https://www.dvcresalemarket.com/blog/dvc-resale-average-sales-prices-for-september-2023/

I am showing BWV still above OKW Extended.

Sounds like whatever you are looking at is that OKW Extended is simply overpriced and possibly not selling?

I have no idea what the World of DVC numbers are based on. Or there's a number of people who buy resale but really don't know how it works. I bought 150pts at OKWE over the summer for $80 plus member fees for 2023. With present MF, I'm at $11.65 per point for the life of the contract. A single studio night at OKW on this contract is somewhere between $100 and $140, depending on the time of year, an absolute bargain. For those who watch closely, I think MF influences price far more than years left on contract.

But a couple of observations/questions:

1 - Admittedly my purchase of OWKE is on the lower side price-wise, but not by a lot (when looking over our ROFR board). Is this list only using contracts sold through Resale Market? Or it is using wider data, as these "average" prices seem super high?

2 - What I think it does reveal is how wide the price gap is between contracts that go to buyers who have explored the system a bit and to buyers that are making a very expensive impulse buy.

3. In terms of some of the above conversations, I'd say that the other important costs in DVC versus Cash Room are these: (a) the cost of not being able to make a last minute trip to Disney World, but instead having to plan. If I wanted to go to WDW on a weekend in December with a cash room, I could book a room anywhere on property, but with DVC, at this point, it would be difficult. That's a cost. And (2) the cost of agreeing to visit Disney VERY regularly over many decades. This is a tremendous financial benefit to Disney (but in terms of their revenue and in terms of planning) but also creates an invisible (lack of flexibility) costs for buyers. These are the two real exchanges, as I see it, in terms of buying DVC versus cash rooms. but the benefit is that, as above, I can stay in OWK for about $120 a night. That's the trade off.

 

[Flash_Sloth]

Did you account for booking at your home resort regularly while others couldn't get a room many times during the year?

The value to the 2042 contracts is booking at the resort itself on those historical point charts that are much cheaper in comparison to RIV or MK resorts.

Yes, that's what I meant by saying how far a point gets you with respect to a night in the home resort. Pick a resort, room type, view, and week that you'd like for a trip, and see its weekday or weekend points. Then for a comparison resort, pick the same room type, view, and week. Each point at a 2042 resort tends to go a lot further than some of the newer resorts like VGF or RIV. They tweak the points charts every year and things vary by the seasons, but you may need 1.4x as many points at RIV as you would for OKW.

It has been a couple of years since I crunched the numbers, and Paul is saying that things have changed. It definitely isn't an easy 1:1 comparison for points between resorts. But we know that eventually as the remaining life on DVC contracts approaches 0, the resale value approaches 0. These are not long term investments, even though I'll say it is amazing how well they've held onto their value so far (at least for the resorts without resale restrictions).

 

[DanCali]

These are not long term investments, even though I'll say it is amazing how well they've held onto their value so far (at least for the resorts without resale restrictions).

This also depends on when you bought. But, case in point, we're in the process of a BWV purchase ( ). The original owner bought direct in 1999 which, from I can can tell, was at around $65/pt(?). They've used it for 25 years and also made a decent capital gain...

 

[TikiRob]

Would have been curious to see four options for this poll.

Yes, non-owner
No, non owner
Yes, owner
No, owner

 

[DebbieB]

Here is something to think about. Is Riviera driving down the price of BCV/BWV?

So the diehard Epcot buyers historically only had those two options. Now with more Riviera contracts on the resale market and BCV/BWV crossing into the "less than 20 years" area you have people comparing the options?

That would be something a resale agent would have to comment on what they hear from buyers.

Problem with Riviera resale is Riviera only. I’ve seen it as low as $115 sold.