Why Price Per Point Fluctuates

[Pluto 32]

Hi DVC Family!

I just submitted an offer and am now waiting on the ROFR for BLT...again.

The first contract got taken back at $130 pp. This current is $145 pp so I am much more confident that this one will go through just fine.

On the ROFR thread it appears (for the most part) that Disney is taking back anything under $140 pp. Above that seems safe and is passing just fine. Now keep in mind that this is all for BLT in 2019. In 2017 this was not the case.

In 2017 BLT was passing the ROFR at $100 pp +!!! That was over two years ago and now the price pp has increase by $40 pp + even though there's two years less on the life of this resort. Don't get me wrong, It's always good to see your investment go up BUT can someone explain why the price increases on contracts when the life of the contracts go down?

Should I have waited until the price pp dropped again?

 

[Ben E N]

The economy is stronger than it was in 2017, and we are that much further from the 2008-2009 collapse. People are more willing to spend, as opposed to save, their money now.
Also, at D23 in 2017, a bunch of upgrades got announced. I'm sure that has helped increase interest in longterm ownership in Disney property.

 

[Great3]

I think the biggest reason is the increase of direct pricing by DVC themselves, so that they can afford to raise the bar for ROFR pricing, and still maintain their profit margins.

With the mouse, I am sure the financial impact is the bottom line guiding all their business decision making, which they will never share, why they ROFR one contact at a higher price, and let another one go at a lower price.

Great3

 

[skippytx]

In my opinion one of the (many) factors behind the increase in DVC point prices, is the increase in onsite hotel room prices. People are looking at alternatives with the sharp increase in hotel room prices, and renting or purchasing DVC is one of them. I know that's the main reason we bought into DVC.

Feb 2015 we took a trip and stayed in an AoA family suite, which was 300, maybe 350 a night tops. 2016 that price went up quite a bit, and today that same room can be 500 a night or more. In 2016 we realized for almost the same price as the AoA family suite we could rent DVC points and stay in a 1 bedroom unit at BLT. No more walking half a mile to the bus stop, no more 15 minute bus rides from MK. Just a quick walk to MK and monorail access. We were hooked. We bought into DVC in July 2017 at 125 a point at BLT, and bought 25 direct for 185 or 191 a point. I missed the 105 to 115 a point BLT contracts by about 3 months.

There are many other factors, like the strong economy and people feeling safe spending 20 to 30 thousand on a luxury purchase right now, but Hotel Room price increases are one factor.

 

[KPeterso]

I think the biggest reason is the increase of direct pricing by DVC themselves, so that they can afford to raise the bar for ROFR pricing, and still maintain their profit margins.

With the mouse, I am sure the financial impact is the bottom line guiding all their business decision making, which they will never share, why they ROFR one contact at a higher price, and let another one go at a lower price.

Great3

I agree that the DVC direct price increases play into it too. I bought VGC resale in 2017 for $152 per point for 50 points (so small contract with a premium). This was before the price increased to $235 per point direct. Resale has gone up quite a bit since then and with my small contract I am sure I could get $190 at least a point. Although, I will not sell my VGC points ---- too hard to get and too hard to get into without owning there.

 

[jerseyduke]

Direct price increases, and less discounts on cash rooms(the economy has been going pretty strong for years now so those discounts have been dropping every year it seems since like 2012ish)

I also think it has to do with Disneys demand. In June over 2000 BLT points were sold directly, to me that is a lot for their direct price.

I also think the ability for DVC to switch UYs does some too. Previously, if they wanted to fill a WL request, they could have needed a specific UY (so cheaper ones in a UY they didn't need might have passer more easily), now any UY will do

 

[Pluto 32]

In my opinion one of the (many) factors behind the increase in DVC point prices, is the increase in onsite hotel room prices. People are looking at alternatives with the sharp increase in hotel room prices, and renting or purchasing DVC is one of them. I know that's the main reason we bought into DVC.

Feb 2015 we took a trip and stayed in an AoA family suite, which was 300, maybe 350 a night tops. 2016 that price went up quite a bit, and today that same room can be 500 a night or more. In 2016 we realized for almost the same price as the AoA family suite we could rent DVC points and stay in a 1 bedroom unit at BLT. No more walking half a mile to the bus stop, no more 15 minute bus rides from MK. Just a quick walk to MK and monorail access. We were hooked. We bought into DVC in July 2017 at 125 a point at BLT, and bought 25 direct for 185 or 191 a point. I missed the 105 to 115 a point BLT contracts by about 3 months.

There are many other factors, like the strong economy and people feeling safe spending 20 to 30 thousand on a luxury purchase right now, but Hotel Room price increases are one factor.

Very good insight. Just which I bought two years ago. Would have saved me almost $10K!

 

[Great3]

Very good insight. Just which I bought two years ago. Would have saved me almost $10K!

LOL, only two years ago? I wish I brought 20 years ago!!!, when I first thought anybody who buy DVC or a timeshare for that matter is foolish. Now I realize I am the fool, having just bought this year, after the biggest resale restrictions of all been implemented. In all actuality, I gave DVC serious thoughts 5 years ago, and really wish I convinced myself back than to buy. The asking price was just too much back than for me, and 5 years later, here I am willing to pay an even higher asking price!!!

Edit to add: You probably don't want to look at this thread https://www.disboards.com/threads/so-what-did-you-pay-per-point-for-your-membership.3746878/ . You would go crazy reading it and beating yourself up. I know I did, LOL!!!

Great3

 

[Pluto 32]

LOL, only two years ago? I wish I brought 20 years ago!!!, when I first thought anybody who buy DVC or a timeshare for that matter is foolish. Now I realize I am the fool, having just bought this year, after the biggest resale restrictions of all been implemented. In all actuality, I gave DVC serious thoughts 5 years ago, and really wish I convinced myself back than to buy. The asking price was just too much back than for me, and 5 years later, here I am willing to pay an even higher asking price!!!

Edit to add: You probably don't want to look at this thread https://www.disboards.com/threads/so-what-did-you-pay-per-point-for-your-membership.3746878/ . You would go crazy reading it and beating yourself up. I know I did, LOL!!!

Great3

Why oh why did I click on that link?!

 

[Disney Dad ADL]

In my opinion one of the (many) factors behind the increase in DVC point prices, is the increase in onsite hotel room prices. People are looking at alternatives with the sharp increase in hotel room prices, and renting or purchasing DVC is one of them. I know that's the main reason we bought into DVC.

Feb 2015 we took a trip and stayed in an AoA family suite, which was 300, maybe 350 a night tops. 2016 that price went up quite a bit, and today that same room can be 500 a night or more. In 2016 we realized for almost the same price as the AoA family suite we could rent DVC points and stay in a 1 bedroom unit at BLT. No more walking half a mile to the bus stop, no more 15 minute bus rides from MK. Just a quick walk to MK and monorail access. We were hooked. We bought into DVC in July 2017 at 125 a point at BLT, and bought 25 direct for 185 or 191 a point. I missed the 105 to 115 a point BLT contracts by about 3 months.

There are many other factors, like the strong economy and people feeling safe spending 20 to 30 thousand on a luxury purchase right now, but Hotel Room price increases are one factor.

I agree. I think the Disney hotel prices is the biggest factor personally, possibly the only meaningful factor. Cost of DVC vs cash prices of Disney hotels is the #1 factor in determining the value IMO. If it costs the same to buy BLT vs paying cash at Contemporary, then who would buy BLT? It wouldn't make very little financial sense to purchase a 60 year DVC contract if you can just pay cash and stay at a hotel for the same price. Better economy, etc all just allows Disney to raise the hotel prices, which in turn increases the value of DVC.

I think that DVC direct pricing only has a very minor effect, and it is more pronounced on the more expensive properties. In my mind, the DVC direct pricing sets a cap on the resale price. If the resale price gets too close to the direct price, then then everyone would just buy direct. This is why it had such a huge effect on VGC. VGC is clearly the most valuable DVC resort to own, but probably the resale price was pushing close enough to the direct price that the direct price was holding down the value some. When the direct price went up, it sort of lifted the lid off of VGC and the price skyrocketed.

On the other hand, I doubt that Aulani's direct pricing has much to do with Aulani's resale price. If they could make Aulani $300 per point direct, I don't think it would change Aulani's resale prices much.

Those are my thoughts anyway.

 

[Pluto 32]

Does anyone know what BLT is selling for direct?

 

[Pluto 32]

I agree. I think the Disney hotel prices is the biggest factor personally, possibly the only meaningful factor. Cost of DVC vs cash prices of Disney hotels is the #1 factor in determining the value IMO. If it costs the same to buy BLT vs paying cash at Contemporary, then who would buy BLT? It wouldn't make very little financial sense to purchase a 60 year DVC contract if you can just pay cash and stay at a hotel for the same price. Better economy, etc all just allows Disney to raise the hotel prices, which in turn increases the value of DVC.

I think that DVC direct pricing only has a very minor effect, and it is more pronounced on the more expensive properties. In my mind, the DVC direct pricing sets a cap on the resale price. If the resale price gets too close to the direct price, then then everyone would just buy direct. This is why it had such a huge effect on VGC. VGC is clearly the most valuable DVC resort to own, but probably the resale price was pushing close enough to the direct price that the direct price was holding down the value some. When the direct price went up, it sort of lifted the lid off of VGC and the price skyrocketed.

On the other hand, I doubt that Aulani's direct pricing has much to do with Aulani's resale price. If they could make Aulani $300 per point direct, I don't think it would change Aulani's resale prices much.

Those are my thoughts anyway.

Remind me what VGC is again? It's not on the acronym list. Haha! Grand Floridian?

 

[Disney Dad ADL]

Remind me what VGC is again? It's not on the acronym list. Haha! Grand Floridian?

Sorry, it's Villas at Grand Californian at Disneyland.

 

[Great3]

Does anyone know what BLT is selling for direct?

$225 per point.

Great3

 

[Pluto 32]

$225 per point.

Great3

Thank you!
So I'm saving $80 pp. Not half of the direct price but not horrible either. Just kicking myself for not buying when it was $100 pp.

 

[kniquy]

BUT can someone explain why the price increases on contracts when the life of the contracts go down?

Should I have waited until the price pp dropped again?

I feel when the direct prices increase it allows for a margin of increase in the resale market. DVC is not going to allow the margin to increase because that affects their ability to sell direct at a high price. Certainly DVC has part in this but owners selling also have a say in where they are pricing their contracts. We bought AKL at the end of 2015 for just about $80 per point - today we could probably sell for $115per point -- $35 per point more in just 4 years. I am sure somewhere someone has a year to year look at direct and resale prices. The market does have a factor in the prices. I believe back in the 08 recession there were contracts being sold very cheap and those in a good financial situation at the time scooped up contracts from those who had to get out of them. That certainly could happen again, but until then i would anticipate that resale prices will rise along with the direct DVC costs and the costs for rooms through disney.

 

[DougEMG]

LOL, only two years ago? I wish I brought 20 years ago!!!, when I first thought anybody who buy DVC or a timeshare for that matter is foolish. Now I realize I am the fool, having just bought this year, after the biggest resale restrictions of all been implemented. In all actuality, I gave DVC serious thoughts 5 years ago, and really wish I convinced myself back than to buy. The asking price was just too much back than for me, and 5 years later, here I am willing to pay an even higher asking price!!!

Edit to add: You probably don't want to look at this thread https://www.disboards.com/threads/so-what-did-you-pay-per-point-for-your-membership.3746878/ . You would go crazy reading it and beating yourself up. I know I did, LOL!!!

Great3

Way back in 2011-2012 there were threads called "How low can you go" or something to that effect. Basically a thread to see who could get the lowest price possible for a contract. Don't go looking for it though as it will just make you sad that we can't buy at those prices anymore.

 

[Brett Wyman]

I had two AKV contracts ROFRd in the last 60 days. Disney is aggressive right now if under a certain price. There are plenty of graphs out there they show you the "safe purchase price". My $106 and $109 contracts were both taken back. My agent finally said choose a $112 or $113 to guarantee it. I'm still waiting on those results

 

[DougEMG]

Everything comes down to supply and demand.

Demand is driven by the hotel prices compared to the cost of staying in a DVC room, while supply is driven by how many contracts are available for sale. Contract length isn't as important, there isn't any real significant difference between 40 years or 42 years on a contract.

 

[kboo]

Before 2015, my kids were not even close to school age, so DH and I could afford to take last minute/short notice trips waiting for the deep discounts. In 2013, we stayed at the Dolphin for <$200/night; in 2014 we stayed in the Contemporary Garden wing for ~$220 a night? In 2015 we booked a BWV "standard" thru Disney for about $225/nt - but we got pixie dusted into a 1br p/g. I was 7 weeks pregnant with #2. Staying in a 1br was a huge game changer; being able to walk to EP and HS was a huge game changer. If we'd bought back then we probably would have bought direct in the mid $100s at either BLT, VGF or BWV. Not that different from the "portfolio" we have now (just substitute RIV for BWV). Of course we would have had 2 more years of points at a higher price, plus direct benefits, but we also weren't as financially stable as we are now. Even though I wish we had bought more, earlier (a common refrain), I'm glad we waited and did our research. @Pluto 32, don't beat yourself up; unless you want to wait until a possible recession, who knows when, prices will likely stay stable or keep going up. And you might as well enjoy vacations *now*.