Here’s Why Resale Has Plenty of Room to Rise

[Heather07438]

The value point is just like collectors… doesn’t matter what price you paid for something, at what price would you let it go?

 

[DougEMG]

If anyone wants to give me $200/point I am happy to sell all of DVC contracts. At roughly $100/point after commission and taxes I'm not interested in selling. Somewhere in between those 2 numbers it isn't quiet as easy a decision to make.

 

[Sandisw]

Um…if someone offered you $10k cash for the painting you bought at the yard sale, and you thus had a choice: (a) take the cash or (b) keep the painting, and you chose to take the painting, it pretty much does imply you’d buy it for $10k, as that’s what just transpired.

But does it? Just because someone has something of value today that is worth $10k and doesn’t sell it, does not mean someone would actually pay $10k for it.

The person may simply turn down the $10K because they like the item and their bank account still has close to that $10k in it,

But, if someone offered them that same item for $10K, they may not pay that because if they end up in a worse position because now their bank account has $10k less instead of $10 less,

DVC is the same way, Todays buyer will have the same SSR contract snd $34 K less in their bank account. I have that same contract, and only $21k less so I get the same product AND $13K. It worth it because I have the $13K to use on other things,

There is a difference in what you’d actually pay and what you are willing to give up based on value.

 

[Drewski77]

But does it? Just because someone has something of value today that is worth $10k and doesn’t sell it, does not mean someone would actually pay $10k for it.

The person may simply turn down the $10K because they like the item and their bank account still has close to that $10k in it,

But, if someone offered them that same item for $10K, they may not pay that because if they end up in a worse position because now their bank account has $10k less instead of $10 less,

DVC is the same way, Todays buyer will have the same SSR contract snd $34 K less in their bank account. I have that same contract, and only $21k less so I get the same product AND $13K. It worth it because I have the $13K to use on other things,

There is a difference in what you’d actually pay and what you are willing to give up based on value.

I actually see it this way:

You and today’s resale buyer have the same $34k in equity in your contract and you both have the same amount of years left on the contract…and ultimately you both have determined there is sufficient value with having $34k in DVC.

You are not selling and putting $34k in your bank account, and the buyer is taking $34k to buy in…essentially the same thing done by both of you.

Each of you are giving up $34k in cash to hold a DVC contract, no difference.

 

[Ssplashhmtn]

But does it? Just because someone has something of value today that is worth $10k and doesn’t sell it, does not mean someone would actually pay $10k for it.

The person may simply turn down the $10K because they like the item and their bank account still has close to that $10k in it,

But, if someone offered them that same item for $10K, they may not pay that because if they end up in a worse position because now their bank account has $10k less instead of $10 less,

DVC is the same way, Todays buyer will have the same SSR contract snd $34 K less in their bank account. I have that same contract, and only $21k less so I get the same product AND $13K. It worth it because I have the $13K to use on other things,

There is a difference in what you’d actually pay and what you are willing to give up based on value.

I think the difference in opinion is this: I believe you are foregoing $13k. I’m willing to give an extra $13k to you right now (me, as a buyer) and increase your bank account (return the $21k you paid and add another $13k), but you are declining that extra $13k by not selling. Maybe you don’t need it. Great, but it’s there for the taking and could be in your account (after a long painful resale process ), but you are foregoing an extra $13k that you could have to use on other things.

Presumably you are foregoing the $13k (available by selling), which you could use on other things, because nothing brings more value to you than the SSR contract (same for me). In that case, it seems you do see the value of today’s prices. I certainly do, especially as compared to cash rates.

 

[lovethesun12]

I figured most would realize, as I do, (especially after 2020) that things could change overnight, and certainly DVC isn’t immune to falling in value.

Of course my original post is about why I believe DVC has room to go up, but I am humble enough to know that things can and often do change quickly…but that discussion is for another thread and beyond the scope of mine.

O.k. I think I see what you are saying.

You are saying resale has plenty of room to rise because sellers are not all selling their contracts.
Based on that logic, resale also has plenty of room to drop, because all of the contracts currently on the market are not sold.

I just find it a peculiar position but I do see what you are saying. I'm not sure I agree. I think it's too simplistic to argue that one position, because there are dozens of reasons the prices may increase (or decrease). Market value is not just determined by owners who decide to sell. The number of owners who decide to sell their contract next month could be the exact same as last month, but if Disney decides to cut their hotel room prices by 50%, it will still affect the price of resale.

 

[Sandisw]

I think the difference in opinion is this: I believe you are foregoing $13k. I’m willing to give an extra $13k to you right now (me, as a buyer) and increase your bank account (return the $21k you paid and add another $13k), but you are declining that extra $13k by not selling. Maybe you don’t need it. Great, but it’s there for the taking and could be in your account (after a long painful resale process ), but you are foregoing an extra $13k that you could have to use on other things.

Presumably you are foregoing the $13k (available by selling), which you could use on other things, because nothing brings more value to you than the SSR contract (same for me). In that case, it seems you do see the value of today’s prices. I certainly do, especially as compared to cash rates.

I agree that it’s about value which is different though then saying you would actually pay the extra outright.

That extra money is only good if you are not going to use the product. I believe that is where people are of different opinions.

So, yes, I can sell today and have extra money…$34k…but i now have to pay costs for vacation.

So the real question becomes can I still get the same number of nights with that new money going a different route.? The answer is I can’t. I’d have to spend not only the $34k you give me, but I’d also end using the original $13K I saved by paying only $21k.

My costs for going to Disney using this contract, no matter how defined, are are still only $21K plus dues and are not $34k plus dues which is what today buyers has to invest,

Personally, I am paying current resale prices with buying RIV at $152 I go to Disney 6 to 8 times a year, so DVC is still worth it.

However, for some current owners, spending that extra money would not be worth continuing to go to WDW.

 

[sethschroeder]

You are saying resale has plenty of room to rise because sellers are not all selling their contracts.
Based on that logic, resale also has plenty of room to drop, because all of the contracts currently on the market are not sold.

Not exactly because nothing instantly sells so something being on the market doesn't mean volume of sellers has bypassed volume of buyers. No different than any other instance of selling that occurs from houses, to cars, to campers.

Also as you outlined there are other factors that exist but one of the biggest is going to be the number of individuals selling (supply). I really took this thread as pointing to that if DVC Direct and Disney keep trending in the same direction they have for the past 50 years then DVC resale can keep increasing even though plenty of long time owners say "its overpriced" and they "would never buy". So I would bet against DVC/Disney reversing course on how they have trended as far as pricing.

 

[Drewski77]

O.k. I think I see what you are saying.

You are saying resale has plenty of room to rise because sellers are not all selling their contracts.
Based on that logic, resale also has plenty of room to drop, because all of the contracts currently on the market are not sold.

I just find it a peculiar position but I do see what you are saying. I'm not sure I agree. I think it's too simplistic to argue that one position, because there are dozens of reasons the prices may increase (or decrease). Market value is not just determined by owners who decide to sell. The number of owners who decide to sell their contract next month could be the exact same as last month, but if Disney decides to cut their hotel room prices by 50%, it will still affect the price of resale.

I wouldn’t necessarily say my position is simplistic or peculiar. Rather, it is just one variable that if all current dynamics stay the same, leads me to believe resale has room to go up.

Of course there are many variables that can impact the price of DVC and those can change at anytime.

However, I wasn’t looking to write a comprehensive analysis of every possible scenario that can impact DVC pricing…I made the assumption (perhaps wrong) that others would understand that this.

And my overall point isn’t that all resale holders are not selling:

It’s that many DVC owners who think DVC is overvalued and wouldn’t buy today, are still not selling which limits supply…and if demand stays high prices have room to go up.

Similar to the housing market right now. Many people might “feel” their house is overvalued, but are not selling because anything they’d buy is expensive (if they don’t move) thus limiting supply.

You and others might disagree, but that is what can make a message board interesting…different viewpoints and ideas beyond our usual thinking.

 

[zavandor]

I love a good old thread of DVC similitudes. It's usually cars, the art one is cuter.

Let's say a famous artist sells paintings for $10,000 (direct points) and lithographies for $7,000 (resale points with restrictions and no blue card).
I'm lucky enough to have purchased a painting 10 years ago, before he became famous, for just $4,000 (grandfathered resale points without restrictions and with the blue card).

I could sell my painting right now, but with art it never seems that it sells for the same price I would have to pay to buy the same item. Then I have to pay a commission to the art gallery (the broker), taxes and fees (FIRPTA, in my case, and capital gain). So if I decide to sell what I can really expect to get is $6,000. Which is still a good margin over my original purchase.
But then, if later I regret I sold, I have two choices:

• pay $7,000, more than I got for the sale of my old painting, to buy a lithography
• pay $10,000 and buy a new painting

So for me it doesn't make sense to sell an original painting to get less than what I would have to spend to buy a lithography. I still enjoy the original painting that I paid $4,000. Which is great, because I would not pay $10,000 now that the artist is more famous. And I would not buy a lithography either, because I think it's overpriced and I wouldn't enjoy it as my cheaper painting.

 

[Drewski77]

I love a good old thread of DVC similitudes. It's usually cars, the art one is cuter.

Let's say a famous artist sells paintings for $10,000 (direct points) and lithographies for $7,000 (resale points with restrictions and no blue card).
I'm lucky enough to have purchased a painting 10 years ago, before he became famous, for just $4,000 (grandfathered resale points without restrictions and with the blue card).

I could sell my painting right now, but with art it never seems that it sells for the same price I would have to pay to buy the same item. Then I have to pay a commission to the art gallery (the broker), taxes and fees (FIRPTA, in my case, and capital gain). So if I decide to sell what I can really expect to get is $6,000. Which is still a good margin over my original purchase.
But then, if later I regret I sold, I have two choices:

• pay $7,000, more than I got for the sale of my old painting, to buy a lithography
• pay $10,000 and buy a new painting

So for me it doesn't make sense to sell an original painting to get less than what I would have to spend to buy a lithography. I still enjoy the original painting that I paid $4,000. Which is great, because I would not pay $10,000 now that the artist is more famous. And I would not buy a lithography either, because I think it's overpriced and I wouldn't enjoy it as my cheaper painting.

Honest question:

If you didn’t have your DVC contracts and blue card tomorrow, but were given the exact amount to purchase them direct…would you?

And I fully understand the limitations of my question, it’s not apples to apples…but neither is a painting, used car, or house analogy.

 

[upritbass]

If you didn’t have your DVC contracts and blue card tomorrow, but were given the exact amount to purchase them direct…would you?

THIS!!!

This is exactly how we approached buying, well, basically anything that costs a significant amount of money, but specifically DVC. It has nothing to do with liquid assets, investments, saving, … We are going to use $x. Period. Since we have $x, is this what we want to spend it on? It wasn’t until our third visit with our DVC agent (after several years) that the answer changed from ‘no’ to ‘yes.’ And we haven‘t regretted it.

 

[Bing Showei]

Honest question:

If you didn’t have your DVC contracts and blue card tomorrow, but were given the exact amount to purchase them direct…would you?

And I fully understand the limitations of my question, it’s not apples to apples…but neither is a painting, used car, or house analogy.

Suppose the answer to this is “Yes.”

Your position can essentially be summed up as:

Resale has room to grow because it’s still cheaper than buying direct or paying cash.

Earth shattering.

You could’ve saved us pages of this nonsense by just stating that. Instead you chose to start this with:

If you own a DVC contract and you are not selling it...then in a sense you are buying at today’s prices.

Which completely ignores that the vast majority of resale owners would not be able to buy what they own by selling what they currently hold.

Ignoring this fundamental reality, you are arguing an academic principle that has no basis in reality as it pertains to the secondary Disney timeshare market where today, products bought and sold are not the same.

 

[Sandisw]

Honest question:

If you didn’t have your DVC contracts and blue card tomorrow, but were given the exact amount to purchase them direct…would you?

And I fully understand the limitations of my question, it’s not apples to apples…but neither is a painting, used car, or house analogy.

I can answer for me. If you gave me the money to buy , then yes.

If I have to pay more of my own money, then no.

 

[sethschroeder]

Ignoring this fundamental reality, you are arguing an academic principle that has no basis in reality as it pertains to the secondary Disney timeshare market where today, products bought and sold are not the same.

And you seem to ignore that by people not selling then it supports the current price point.

Again I asked it pages ago tell me what is the value to you of whatever benefits you have today vs if you bought resale. How much is that worth to you? That will then frame all math.

 

[Drewski77]

Suppose the answer to this is “Yes.”

Your position can essentially be summed up as:

Resale has room to grow because it’s still cheaper than buying direct or paying cash.

Earth shattering.

You could’ve saved us pages of this nonsense by just stating that. Instead you chose to start this with:

Which completely ignores that the vast majority of resale owners would not be able to buy what they own by selling what they currently hold.

Ignoring this fundamental reality, you are arguing an academic principle that has no basis in reality as it pertains to the secondary Disney timeshare market where today, products bought and sold are not the same.

I was asking someone else a question that I was genuinely curious about…no offense meant.

And as far as non-sense goes…no one is forcing you or anyone else to read one post in this thread, let alone pages and pages.

 

[Drewski77]

I can answer for me. If you gave me the money to buy , then yes.

If I have to pay more of my own money, then no.

Thanks for your honest answer, makes sense to me.

 

[Bing Showei]

And you seem to ignore that by people not selling then it supports the current price point.

Again I asked it pages ago tell me what is the value to you of whatever benefits you have today vs if you bought resale. How much is that worth to you? That will then frame all math.

I’m not ignoring that. I’m arguing it’s a grossly myopic and singular view to suggest supply side economics is what largely determines market valuation of the resale contracts.

In fact you have argued that the economics of Disney’s timeshare is viable because it is cheaper than what Disney charges. You regularly hold up Riviera’s cash price to demonstrate the savings of buying into timeshare ownership there.

I would argue that Disney cash prices and Direct prices are a far greater determinant of resale contract value than supply side factors which you and defenders of the thrust of this thread are suggesting.

 

[Drewski77]

And you seem to ignore that by people not selling then it supports the current price point.

Again I asked it pages ago tell me what is the value to you of whatever benefits you have today vs if you bought resale. How much is that worth to you? That will then frame all math.

Exactly.

 

[Judique]

All good points but:

I am specifically referring to the person who says:

“I own DVC but wouldn’t buy at today’s prices because it doesn’t provide enough value...but I’m not selling.”

Let me try it this way:

If someone offered you $500 per point to sell today and you couldn’t buy back in would you?

In a heartbeat.....