Would you buy again?

[Cabius]

I am confused as to why people think "I wouldn't buy at these prices" means "I have to sell my bargain from years past." Just because you keep it because you are still enjoying it doesn't mean you think it is worth current pricing! *scratches head*

“Would I rather have this thing, or the money that this thing costs?” is the same question whether somebody is buying something new, or holding something that they could sell.

If I spend $20,000 on DVC points, I’m saying that, yes, I would rather have the points than the money.

If I could sell my DVC points for $20,000 and choose not to, I’m saying that I would rather have the points than the money.

*All things being equal* the decision to buy and the decision to hold are identical answers to the question.

Now, transaction fees, taxes, and changes in perks mean that it really isn’t that simple. It really is better/cheaper to hold vs buy! But if those weren’t a factor, the underlying economic principle is sound. If you choose not to sell a DVC membership you are deciding that you would rather have the points than the money.

There are intangible motivations like “feeling like I got a good deal” or an emotional attachment that also complicate this. An economist might call these fallacies, though at the end of the day I figure if you put monetary value into an emotional attachment, that’s your choice whether an egghead like me thinks it “makes sense” or not!

 

[ziravan]

“Would I rather have this thing, or the money that this thing costs?” is the same question whether somebody is buying something new, or holding something that they could sell.

If I spend $20,000 on DVC points, I’m saying that, yes, I would rather have the points than the money.

If I could sell my DVC points for $20,000 and choose not to, I’m saying that I would rather have the points than the money.

*All things being equal* the decision to buy and the decision to hold are identical answers to the question.

Now, transaction fees, taxes, and changes in perks mean that it really isn’t that simple. It really is better/cheaper to hold vs buy! But if those weren’t a factor, the underlying economic principle is sound. If you choose not to sell a DVC membership you are deciding that you would rather have the points than the money.

There are intangible motivations like “feeling like I got a good deal” or an emotional attachment that also complicate this. An economist might call these fallacies, though at the end of the day I figure if you put monetary value into an emotional attachment, that’s your choice whether an egghead like me thinks it “makes sense” or not!

Transactional neutrality (all things being equal) makes a lot of sense when you’re talking about things like stock trades. If Stock A is worth $50 and Stock B is worth $50, then Stock A = Stock B in value. $50 is the common ground between buy and sale, right now. The valuation of those stocks are going to fluctuate based on their individual traits but the real time valuation right now is what matters.

The more you mix the neutrality of value into human entanglements, the less it holds true.

We bought the perfect home, spread out on acreage in the country near but not in suburbia also near acreage my DW inherited and near MIL. And we got it for a bargain. We would not sell it today at three times it’s appraised value (nobody would buy it at that price anyway.)

Our valuation of the property and an arms length’s buyer’s evaluation would never nearly meet. My guess is that’s common in real estate. I also think Florida considers DVC (timeshares) a real estate transaction at least partially for similar reasons.


(That’s the barn that we’re building on property, not the home.)

 

[mustinjourney]

I am confused as to why people think "I wouldn't buy at these prices" means "I have to sell my bargain from years past." Just because you keep it because you are still enjoying it doesn't mean you think it is worth current pricing! *scratches head*

It is an economical principle. Assuming no transactional costs and no loss of perks, if you forego selling something, then you are effectively giving up the same amount of money as it would cost to buy in. Which means people are placing a value on their contract that is equal to today’s resale prices.

Of course, there are transactional costs and for some, there could be a loss of perks (AP discounts), as well as additional costs associated with income taxes.

So accounting for those factors, selling would net a fairly sizable amount less than it would cost to buy-in at today’s resale pricing. those factors can certainly account for some of the discrepancy.

But I’m willing to bet there is a psychological factor at play in that PAYING money feels worse than RECEIVING money feels good for many people.

It’s a lot like gambling for me, I should feel equally about winning or losing a hand of blackjack—but I don’t.

 

[buzzrelly]

I'm not even going to read what everyone's replies are because nothing bums me out more than people complaining how bad DVC/Disney is.

To answer your question…I've been a DVC member since 2015 and I would absolutely do it again. I love planning our vacations and not having to include the cost of the hotel when we budget. I love staying at the DVC resorts and I love the perks that come with it.

 

[mustinjourney]

Transactional neutrality (all things being equal) makes a lot of sense when you’re talking about things like stock trades. If Stock A is worth $50 and Stock B is worth $50, then Stock A = Stock B in value. $50 is the common ground between buy and sale, right now. The valuation of those stocks are going to fluctuate based on their individual traits but the real time valuation right now is what matters.

The more you mix the neutrality of value into human entanglements, the less it holds true.

We bought the perfect home, spread out on acreage in the country near but not in suburbia also near acreage my DW inherited and near MIL. And we got it for a bargain. We would not sell it today at three times it’s appraised value (nobody would buy it at that price anyway.)

Our valuation of the property and an arms length’s buyer’s evaluation would never nearly meet. My guess is that’s common in real estate. I also think Florida considers DVC (timeshares) a real estate transaction at least partially for similar reasons.

View attachment 313262
(That’s the barn that we’re building on property, not the home.)

Nice view!

Another factor involved with real estate is replacement cost. If you sold your actual house, you’ll need to find another to live in. But if prices have jumped up everywhere, you’re going to end up paying more money to get similar utility, so it makes sense to hold the property.

 

[DougEMG]

One of the things that I considered when I bought was how long till I broke even. The shorter that time period, the more comfortable I was with buying into a TIMESHARE. I want to go to WDW, just which option (owning, renting, cash) is cheap in the short, medium and long term.

When I bought, my breakeven point was around 7-8 years. I have reached my breakeven point so now everything is a bonus.

Buying now though, the breakeven point is too far out for me to be comfortable with. Too much risk for my tastes. Plus I am that much old, so have that many less years I will be able to travel to WDW.

So those things all play a part in me keeping my points, but not wanting to buy in at today's prices.

 

[DrPhysics]

I wonder if the folks who have regrets or wouldn't buy again would kindly consider putting their contracts up for sale, because some of us would like to buy more points, and resale inventory at some resorts is frustratingly low!

This may just be me, but it's easy for me to see all the downsides of decisions I've made in the past, but it's impossible to evaluate the downsides of alternate paths I may have taken but didn't. Not that the downsides of decisions made aren't real, but the grass is always greener, etc.

 

[paults]

we bought in 2002 and would not do it again in today's market. I know they need to make money but the prices are getting ridiculous.

 

[dd08]

One of the things that I considered when I bought was how long till I broke even. The shorter that time period, the more comfortable I was with buying into a TIMESHARE. I want to go to WDW, just which option (owning, renting, cash) is cheap in the short, medium and long term.

When I bought, my breakeven point was around 7-8 years. I have reached my breakeven point so now everything is a bonus.

Buying now though, the breakeven point is too far out for me to be comfortable with. Too much risk for my tastes. Plus I am that much old, so have that many less years I will be able to travel to WDW.

So those things all play a part in me keeping my points, but not wanting to buy in at today's prices.

Just out of curiosity what is considered the ballpark break-even point now at the Current prices (not just DVC prices but WDW hotel room prices)?

We added on at GFV in 2014 and while it was obviously expensive; the cost to Stay in even the cheapest room at GF (which when I do my cost comparison I compare to cheapest cash non-DVC room at same resort).

I expect to hit our break even for the add-on after about 3-4 more trips to GF.

 

[cruisin5]

We purchased in 2001 and it's been great. However, removing the non-expiring hopper option and the increasing competition to book are negatives. Do we regret purchasing in 2001 ... absolutely not. Would we buy new in 2018 knowing what we know now ... probably not.

I feel bad for those purchasing small contracts thinking they can book at value studio at 11 months and those thinking they can rent without risk or cost or tax complications.

Our DVC has been great but the rose colored colored glasses have been removed. (I am although wanting a pair of rose colored ears

 

[Dean]

Just out of curiosity what is considered the ballpark break-even point now at the Current prices (not just DVC prices but WDW hotel room prices)?

We added on at GFV in 2014 and while it was obviously expensive; the cost to Stay in even the cheapest room at GF (which when I do my cost comparison I compare to cheapest cash non-DVC room at same resort).

I expect to hit our break even for the add-on after about 3-4 more trips to GF.

I'd want to break even in 10-12 years and if you account for the TVM, dues escalation and use a reasonable comparison (NOT DVC rack rates), that's pushing it today.

 

[dd08]

I'd want to break even in 10-12 years and if you account for the TVM, dues escalation and use a reasonable comparison (NOT DVC rack rates), that's pushing it today.

Thanks. What are you using for reasonable comparison? I don’t use DVC room rates, but hotel room rates

 

[Dean]

Thanks. What are you using for reasonable comparison? I don’t use DVC room rates, but hotel room rates

In my opinion the only two reasonable metrics are what you would have paid not owning or renting points for DVC. At times looking at the increased value is reasonable to figure into the equation.

 

[ziravan]

In my opinion the only two reasonable metrics are what you would have paid not owning or renting points for DVC. At times looking at the increased value is reasonable to figure into the equation.

I also think a reasonable factor is sell value at the end of owner’s desire to keep.

I have 3 contracts, Poly, BCV, and AKV.

BCV is our favorite so we probably won’t sell it until it’s close enough to 2042 that either DVC will extend or more likely, it starts to devalue as end date approaches. Both are unknowns that I freely accept because, BCV.

But the other two? Historically, many DVC owners have been able to use DVC for a decade and more and still get more back from sell than purchase.

Certainly, if you bought OKW 25 yrs ago for $48 and sold now for $85, the timeframe to pay off argument is obliterated.

I think that given DVC’s track record and the Wall St famous warning that “past performance doesn’t mean future results” that nevertheless its a reasonable bet that either the initial buy cost will take care of itself upon sale, or the lack of sale will create its own value over time:

If you’re not selling, the payoff window doesn't matter. If you DO sell at a later point, you should get back the value of your buy in cost mostly, if not fully. Obviously, for example, if we hit a major recession this year and you bought AKV at $100, it might be worth $60 in a recession. But over time, historically and barring major economic hiccups, the buy in cost has held its value at sell.

If you make a reasonable assumption of the buy in cost holding value, then only the TVM for tying up those funds and MFs should be considered for payback time.

In that case, an argument could be made that DVC is saving fairly significant costs over say renting right off the bat: $7mf vs $17 renting.

Or. If you could buy DVC today, hold for 10 years while getting deluxe rooms for the price of moderates, then sell in 10 years and recoup all of your buy in cost, is DVC still a good deal?

I would argue that purchase price should hold consistent with selling price over time and therefore shouldn’t be a factor in value over time except for the time value of tying up the funds. And that TVM, if you go to WDW frequently, would be used in higher room costs anyway*

*assuming we’re making direct comparisons, but if that’s not the point of buying into DVC, to stay on property in deluxe resorts, then DVC is wrong for you anyway.

 

[ziravan]

If you buy Poly to keep for 50 years, the up front cost to buy is a minor part of the whole ownership cost. I would argue that if you buy and hold DVC for twenty years and learn the product and use it well, DVC is a great deal.

If you buy and sell later, so long as you hold the property long enough to weather any short term economic downturns, then the buy in price shouldn’t matter so long as it stays consistent with a selling price.

There’s little difference between buying Poly at $50 and selling 10 years later at $60 than buying at $150 and selling 10 years later at $180. Except for the TVM: tying up $150/point has more opportunity cost implications than tying up $50/point.

That’s what I’m arguing, that the TVM should be considered, as should the unknown of “past performance doesn’t equal future performance”. But. It’s reasonable to calculate that the buy in price would largely be a recouped item over time.

It’s similar to buying a duplex for your college kid, renting out the other side, and selling when he graduates college. If you play it right, the value of not paying rent more than outweighs the cost/sell equations, even considering the TVM (which isn’t being spent on five years of rent).

 

[Teresadoxie]

We became owners in 1998 and have 1400 points in all most thru resale. Best decision we ever made.

Envy!!! Love to have more.

 

[ziravan]

Last point, using BCV as my example. We bought in ‘14 for $84/point.

For at least the next decade, we’re in the catbird seat. Anything is possible but my guess is that we will be able to sell for more than our buy in costs.

At any point we decide to sell, BCV will likely be a bargain for us. This goes to the heart of “Would I buy again?”

It’s easy to hold BCV knowing that it will most likely hold more value over the near term than when we bought. It’s not quite as easy to shell out today’s prices, the argument of my two recent posts notwithstanding.

And I don’t believe that’s hypocritical. It’s the difference between thinking logically and thinking emotionally. Both should come into play and find a balance that will be in a different place for each of us.

 

[Dean]

I also think a reasonable factor is sell value at the end of owner’s desire to keep.

I have 3 contracts, Poly, BCV, and AKV.

BCV is our favorite so we probably won’t sell it until it’s close enough to 2042 that either DVC will extend or more likely, it starts to devalue as end date approaches. Both are unknowns that I freely accept because, BCV.

But the other two? Historically, many DVC owners have been able to use DVC for a decade and more and still get more back from sell than purchase.

Certainly, if you bought OKW 25 yrs ago for $48 and sold now for $85, the timeframe to pay off argument is obliterated.

I think that given DVC’s track record and the Wall St famous warning that “past performance doesn’t mean future results” that nevertheless its a reasonable bet that either the initial buy cost will take care of itself upon sale, or the lack of sale will create its own value over time:

If you’re not selling, the payoff window doesn't matter. If you DO sell at a later point, you should get back the value of your buy in cost mostly, if not fully. Obviously, for example, if we hit a major recession this year and you bought AKV at $100, it might be worth $60 in a recession. But over time, historically and barring major economic hiccups, the buy in cost has held its value at sell.

If you make a reasonable assumption of the buy in cost holding value, then only the TVM for tying up those funds and MFs should be considered for payback time.

In that case, an argument could be made that DVC is saving fairly significant costs over say renting right off the bat: $7mf vs $17 renting.

Or. If you could buy DVC today, hold for 10 years while getting deluxe rooms for the price of moderates, then sell in 10 years and recoup all of your buy in cost, is DVC still a good deal?

I would argue that purchase price should hold consistent with selling price over time and therefore shouldn’t be a factor in value over time except for the time value of tying up the funds. And that TVM, if you go to WDW frequently, would be used in higher room costs anyway*

*assuming we’re making direct comparisons, but if that’s not the point of buying into DVC, to stay on property in deluxe resorts, then DVC is wrong for you anyway.

I don't think anyone should buy planning to sell later but it's good to at least consider an exit strategy though I do not feel that worrying about resale price assumptions is a good consideration in the purchase decision, I do feel it's a good consideration in valuing a possible purchase. That's one of the reason retail is generally not a good choice. I also don't feel the ending date of the RTU is very important, even for one young enough for it to be a consideration, but again, it is part of the valuation process. Timeshares will be more volatile than the stock market but DVC will likely track the trends just like resort property in general will. It's likely they will tend to go up above what's reasonable when things are good (like now) and drop more dramatically when they are not. There will be a drop at some point, whether it's worth waiting on or will be enough to matter, no one knows and that would be a gamble for one where DVC truly makes sense. Interesting that the same $48 a point invested at the low point 10 years ago would be worth almost $200 now.

 

[ziravan]

I don't think anyone should buy planning to sell later but it's good to at least consider an exit strategy though I do not feel that worrying about resale price assumptions is a good consideration in the purchase decision, I do feel it's a good consideration in valuing a possible purchase. That's one of the reason retail is generally not a good choice. I also don't feel the ending date of the RTU is very important, even for one young enough for it to be a consideration, but again, it is part of the valuation process. Timeshares will be more volatile than the stock market but DVC will likely track the trends just like resort property in general will. It's likely they will tend to go up above what's reasonable when things are good (like now) and drop more dramatically when they are not. There will be a drop at some point, whether it's worth waiting on or will be enough to matter, no one knows and that would be a gamble for one where DVC truly makes sense. Interesting that the same $48 a point invested at the low point 10 years ago would be worth almost $200 now.

I don’t think you should buy with a plan to sell, but that’s the crux of the break even argument.

If you do end up keeping it, and using it well (learning the system), DVC is likely a great deal over the long haul.

Timeshares are more volatile than say the stock market, to be sure. But I do believe that DVC’s history, combined with upcoming Star Wars land,etc., makes DVC an ongoing good bet.

(Obviously if you bought in 2006 and sold in 2009, you probably took a bath, but generally speaking, if you bought and held for five years, DVC holds its value. Especially buying resale).

 

[Dean]

I don’t think you should buy with a plan to sell, but that’s the crux of the break even argument.

If you do end up keeping it, and using it well (learning the system), DVC is likely a great deal over the long haul.

Timeshares are more volatile than say the stock market, to be sure. But I do believe that DVC’s history, combined with upcoming Star Wars land,etc., makes DVC an ongoing good bet.

(Obviously if you bought in 2006 and sold in 2009, you probably took a bath, but generally speaking, if you bought and held for five years, DVC holds its value. Especially buying resale).

I wouldn't look at it that way. I look at a timeshare like I would an extremely high risk investment. My view is that the long term risk is high so I want to "get my money back" fairly quickly to minimize that long term risk. To me that's in the range of 10-12 years including all the variables. Those that use rack rates and ignore the other cost variables like the TVM, lost opportunity cost, interest if financed and risk are fooling no one but themselves. One should buy assuming it'll be worth nothing at some point and that they likely can't sell at some time in the future. I don't agree that one can assume that DVC will be a safe long term investment, esp going in right now. It's basically like buying a new or newer high end automobile.