home News forums Reviews Trade links

Go Back   The DVC Boards at MouseOwners.com - the place to talk DVC and Walt Disney World > VACATION CLUB RESOURCES > Questions about Buying and Selling DVC
 Register FAQ Calendar Search Today's Posts Mark Forums Read

 Notices

Reply
 
Thread Tools Display Modes

Old 07-11-2018, 11:00 AM   #1
Loro
Grand Villa
 
Loro's Avatar
 
Join Date: Apr 2014
Posts: 1,270
Default DVC Bubble

I've been thinking a lot lately that DVC prices (and Disney prices in general, but that is a different although related topic) are approaching a critical mass, and may be a bubble that will soon burst.

Ten years ago with the great recession, DVC prices (especially resale prices) were extraordinarily low and a great bargain for those who knew and could afford it. Disney itself even had great bargains for people to travel to WDW as people could no longer fit it into their budgets. As the economy has grown back, the prices have continued to rise faster and faster. The last few years even more so. For example, 4 years ago one could easily buy a BLT contract for around $100/pt. Now the price for BLT is approaching $150/pt., a 50% increase over that same 4 years.

With the economy looking more and more like it may hit a downturn soon (normal cycles of capitalist market economies dictate that it is inevitable), and Disney pushing to increase supply and drive price higher and higher is it creating the perfect storm for which the DVC market may crash?

I am starting to think that it may very well happen sooner than later. What are your thoughts?
Loro is offline   Reply With Quote
Old 07-11-2018, 11:07 AM   #2
BobParr
One Bedroom
 
BobParr's Avatar
 
Join Date: Mar 2016
Location: Insuricare - Your Life is in Our Hands
Posts: 231
Default

Quote:
Originally Posted by Loro View Post
I've been thinking a lot lately that DVC prices (and Disney prices in general, but that is a different although related topic) are approaching a critical mass, and may be a bubble that will soon burst.

Ten years ago with the great recession, DVC prices (especially resale prices) were extraordinarily low and a great bargain for those who knew and could afford it. Disney itself even had great bargains for people to travel to WDW as people could no longer fit it into their budgets. As the economy has grown back, the prices have continued to rise faster and faster. The last few years even more so. For example, 4 years ago one could easily buy a BLT contract for around $100/pt. Now the price for BLT is approaching $150/pt., a 50% increase over that same 4 years.

With the economy looking more and more like it may hit a downturn soon (normal cycles of capitalist market economies dictate that it is inevitable), and Disney pushing to increase supply and drive price higher and higher is it creating the perfect storm for which the DVC market may crash?

I am starting to think that it may very well happen sooner than later. What are your thoughts?
There's no question it will happen. The question that matters is when. People warned against the real estate bubble bursting for years, but still lost their money because they didn't get out at the right time.

One thing to consider is that not all DVC are equal. Some won't be affected at the same rate, or to the same degree. The curve for HHI and Vero, for example, won't look much like BCV or BLT.
BobParr is offline   Reply With Quote
Old 07-11-2018, 11:42 AM   #3
DisneyTravelers
Grand Villa
 
DisneyTravelers's Avatar
 
Join Date: Oct 2009
Location: Raleigh NC
Posts: 1,864
Default

I donít think there is any way it can continue for long at this rate. The price per point is so high for the new resorts. I am not even sure it is a good deal for people buying in directly right now. Heck, people are paying more for SSR resale that we did when we bought in 2007 as a direct purchase.
__________________
Spring Break Trip Report / How To Beat The Crowds & Still Have FUN!
http://www.mouseowners.com/forums/sh...ad.php?t=64670

First Time Cruiser Trip Report http://www.mouseowners.com/forums/sh...ad.php?t=87522


Me DH DS21 DD15

DisneyTravelers is offline   Reply With Quote
Old 07-11-2018, 11:54 AM   #4
John2247
Two Bedroom
 
John2247's Avatar
 
Join Date: Mar 2011
Location: South Louisiana
Posts: 844
Default

I am glad we bought 10 years ago. I wish now that we had bought more. I would expect the bubble to burst in the next two years or so, as we are due a recession in the country.

John
__________________
John2247 is offline   Reply With Quote
Old 07-11-2018, 12:02 PM   #5
C&CPoly2017
Waiting to pass ROFR (i.e., n00b)
 
Join Date: Jun 2018
Location: New York
Posts: 9
Default

I would fully expect DVC resale prices to trend downward in a recessionary environment, but it also doesn't function like a normal market. With direct prices close to $200 and perhaps going higher with the Riviera, there's quite a lot of money for Disney to make to buy back contracts as they are now in the high $90/low $100 range that puts a bit of a floor on pricing.

Here are a couple other factors to consider. Perhaps Disney mispriced the contracts previously by underestimating the demand from them and they are just now adjusting? Consider that a week long vacation at most of these resorts will cost $15 - $20k in 25 years if pricing continues to increase even 4-5% a year when some of the earlier contracts expire - there will be many economic cycles between now and then and that point alone illustrates the value of the contracts.
C&CPoly2017 is offline   Reply With Quote
Old 07-11-2018, 12:07 PM   #6
Jotunheim
Studio
 
Jotunheim's Avatar
 
Join Date: Aug 2017
Location: SE Wisconsin
Posts: 111
Default

How much did resale prices drop in the last recession? At the time, I was interested in BWV and it seems that prices were around $65-75 per point in 2009, but I have no idea what they were going for when the economy was healthy in 2006 or 2007.
__________________
Jotunheim is offline   Reply With Quote
Old 07-11-2018, 12:20 PM   #7
cvjw
Grand Villa
 
Join Date: Jun 2009
Posts: 1,384
Default

Quote:
Originally Posted by Jotunheim View Post
How much did resale prices drop in the last recession? At the time, I was interested in BWV and it seems that prices were around $65-75 per point in 2009, but I have no idea what they were going for when the economy was healthy in 2006 or 2007.
We purchased BCV for $80 per point in 2008, not sure what BWV was selling for at that time. We purchased BWV points around 2012 or 2013 for $77 per point.

Just wanted to add that in addition to the DVC prices getting so high lately, the maintenance fees are approaching $7 per point. At some point, it may be more expensive to own DVC points as opposed to just renting points or booking directly with Disney.

Using DVC points is still a great deal for us since we bought in when prices were so much lower.
cvjw is offline   Reply With Quote
Old 07-11-2018, 12:53 PM   #8
Loro
Grand Villa
 
Loro's Avatar
 
Join Date: Apr 2014
Posts: 1,270
Default

Quote:
Originally Posted by Jotunheim View Post
How much did resale prices drop in the last recession? At the time, I was interested in BWV and it seems that prices were around $65-75 per point in 2009, but I have no idea what they were going for when the economy was healthy in 2006 or 2007.
I'm not sure exactly. It is tough to find historical data on it that goes back that far. I've heard many a story about people getting prices in the $50-60 range though.
Loro is offline   Reply With Quote
Old 07-11-2018, 01:12 PM   #9
Loro
Grand Villa
 
Loro's Avatar
 
Join Date: Apr 2014
Posts: 1,270
Default

Quote:
Originally Posted by C&CPoly2017 View Post
I would fully expect DVC resale prices to trend downward in a recessionary environment, but it also doesn't function like a normal market. With direct prices close to $200 and perhaps going higher with the Riviera, there's quite a lot of money for Disney to make to buy back contracts as they are now in the high $90/low $100 range that puts a bit of a floor on pricing.

Here are a couple other factors to consider. Perhaps Disney mispriced the contracts previously by underestimating the demand from them and they are just now adjusting? Consider that a week long vacation at most of these resorts will cost $15 - $20k in 25 years if pricing continues to increase even 4-5% a year when some of the earlier contracts expire - there will be many economic cycles between now and then and that point alone illustrates the value of the contracts.
Well it is a somewhat normal market really. The DVC and WDW market is dictated by people's discretionary/vacation spending availability. If that goes away, and/or current members need to sell their DVCs due to life and needing the money, the market will become saturated with resales. One of the first things to hit the chopping block in financially bad times is vacation spending. Without people able or willing to buy them at their current price due to the same economic factors, the prices should drop dramatically until it hits a price that people may be able/willing to pay.

If Disney tries to sell for ~$200/pt. and nobody is willing or able to buy, the price will come down. If the resale market is flooded with cheap inventory, Disney will have no choice but to further lower their direct prices. They could buy up the inventory off the resale market through ROFR, but that would hurt them more than it helps since they would then be responsible for all of the dues, taxes, etc. for all of that inventory, plus nobody would be staying and spending money while using those points.

They would be sitting on all of that inventory. The longer DVC inventory sits, the worse off Disney is. Disney is already pricing out many people. They are setting themselves up for a huge hit in my opinion, especially with such aggressive building of new DVC inventory.

As far as 25 years down the road as you mention, it is impossible to tell. If the country's wages continue on their current trend along with prices increasing at Disney it would literally become a resort for only the super-rich (it's already getting close). Dues will also likely increase significantly to match over those 25 years, so the costs of ownership will increase as well and it may not be as much of a value as it seems.
Loro is offline   Reply With Quote
Old 07-11-2018, 01:15 PM   #10
C&CPoly2017
Waiting to pass ROFR (i.e., n00b)
 
Join Date: Jun 2018
Location: New York
Posts: 9
Default

Quote:
Originally Posted by Loro View Post
Well it is a somewhat normal market really. The DVC and WDW market is dictated by people's discretionary/vacation spending availability. If that goes away, and/or current members need to sell their DVCs due to life and needing the money, the market will become saturated with resales. One of the first things to hit the chopping block in financially bad times is vacation spending. Without people able or willing to buy them at their current price due to the same economic factors, the prices should drop dramatically until it hits a price that people may be able/willing to pay.

If Disney tries to sell for ~$200/pt. and nobody is willing or able to buy, the price will come down. If the resale market is flooded with cheap inventory, Disney will have no choice but to further lower their direct prices. They could buy up the inventory off the resale market through ROFR, but that would hurt them more than it helps since they would then be responsible for all of the dues, taxes, etc. for all of that inventory, plus nobody would be staying and spending money while using those points.

They would be sitting on all of that inventory. The longer DVC inventory sits, the worse off Disney is. Disney is already pricing out many people. They are setting themselves up for a huge hit in my opinion, especially with such aggressive building of new DVC inventory.

As far as 25 years down the road as you mention, it is impossible to tell. If the country's wages continue on their current trend along with prices increasing at Disney it would literally become a resort for only the super-rich (it's already getting close). Dues will also likely increase significantly to match over those 25 years, so the costs of ownership will increase as well and it may not be as much of a value as it seems.
I understand your points, but my comment on not being a normal market are related to Disney's ROFR. There's quite a lot of room for prices to slack on the direct side before it wouldn't make sense for them to buy back points at ~$100/point to sell at a discount to direct.
C&CPoly2017 is offline   Reply With Quote
Reply

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Forum Jump


All times are GMT -4. The time now is 05:14 PM.

© MouseOwners. "MouseOwners" is a registered servicemark. This is an unofficial fan site and is not affiliated in any way with The Walt Disney Company, the Disney Vacation Club, Disney Vacation Development, or any of their affiliates or subsidiaries. All Disney images © The Walt Disney Company.
Powered by Forum Software