Poll: Has the 2042 Bubble Burst?

[Cfabar1]

If they just kept the term to 50 year contracts they would have minimized this issue.

But as mentioned the person making the decision to end the contracts all in 2042 must have had a reason.

That person probably is long gone but maybe they left the reasoning and plan for 2042 behind.

I suspect, and I have no knowledge of this, but I strongly suspect the idea was to ramp up DVC very quickly into a national network (remember, the initial plan was not to have WDW properties in abundance). Build out.

So all these resorts ending at the same time initially was probably a good idea - VB, HHI, OKW, as long as the never opened DVC Long Beach, DVC NYC Times Square, DVC project in the mountains (can’t remember if it was Utah or Colorado off the top of my head) all end in 2042. And, the “premium” WDW DVC Disney’s Boardwalk Villas all ending at that time makes sense.

As DVC expanded more in WDW, they continued with the strategy until it started becoming Lower than 40 years. As I recall there is a 40 year minimum in the Florida timeshare law, but maybe I am mistaken on that. At that point they reset to 50 with the first new resort (SSR), and have stuck with it since.

 

[SpaceMountain77]

I suspect that a true pop will occur in 2030 or 2031 when DVC is no longer able to offer 10-year, fixed-rate mortgage financing for 2042 resorts.

 

[KAT4DISNEY]

If they just kept the term to 50 year contracts they would have minimized this issue.

But as mentioned the person making the decision to end the contracts all in 2042 must have had a reason.

That person probably is long gone but maybe they left the reasoning and plan for 2042 behind.

Most likely they wanted to have everything end at the same time, including DVC. 2042 was a safety net if it wasn't doing well. Then they decided it was a good money maker and sustainable if they mostly focused on accommodations at Disney locations. Somewhere they decided they would need a longer contract to keep interest in selling properties and switched to a 50 year contract models vs ends in 2042 model. And doing that they wouldn't suddenly get a rash of onsite hotel rooms back if they staggard them.
All guesses but they really didn't know what they were getting into at the start.

 

[Cfabar1]

All guesses but they really didn't know what they were getting into at the start.

Yes, this is so true, and the program changed significantly from what they initially were attempting to create. I think Disney must be so thrilled with how DVC has evolved over the years.

 

[Disney_escape]

I agree. The burst hasn't happened to BCV and BWV. I think its popped for CCV and BLT, two resorts I own . I'm hoping a refurb will help at BLT, but not so sure since there are, and will be, so many DVC options on the monorail loop.

If the Murphy beds go in this coming year, I think BLT will become much more desirable.

 

[BruinEd03]

As I've said a few times now, it's going to be the flood of points that will be the biggest challenge. DVC can't just pause new resort construction and hope they can sell folks on 50 year old resorts alone (regardless of how well they are renovated), so in addition to whatever new inventory they are selling in 2042, even assuming they sell off Vero Beach and Hilton Head, they'll still be stuck with what today is represented by nearly 9.8 millions points (and that's not including whatever is still left of 2042 points at OKW).

Sure, the three remaining 2042's (BRV, BWW, BCV) will take time to renovate, and would likely be staggered and rented out for cash as they wait their turn, but that only raises the other problem of flooding the market with additional hotel rooms, which even today is the last thing they want or need.

Disney will either be stuck with a ton of timeshare inventory that can't be sold pending refurbishment, a ton of converted cash hotel room inventory, or if they decide to bite the financial bullet and renovate them all at once, at least two rather prominent shuttered hotels right on Crescent Lake.

I don't think Disney will have problems selling DVC rooms as hotel rooms, especially within walking distance to EPCOT. Keep in mind DVC are hotel rooms. They represent a demand for hotel rooms. Even without DVC, people will want to stay at those resorts. DVC owners just happen to stay in the DVC side intead of the hotel side. Also with the hotel rates, Disney actually gets additional revenue since rental of DVC rooms means they will cover more than maintenance - it will generate profit. Currently Disney doesn't really get any revenue from renting out the DVC resorts - that was pretty much exhausted with DVC sales. Dues just cover actual maintenance costs.

Hypothetical scenerio:

2042, BR, BC, and BW go off-line from DVC. BC and BR stay open as hotel stays. That's still revenue for Disney. They shut down boardwalk and rebuild taking 2-3 years (2042, 2043, and part of 2044). 2044 Boardwalk goes online for sales. Beach Club is then shut down for demolition and opening in 2047. Then BR is shut down for demolition and opening in 2050.

In the meantime, they have already slashed hotel inventory. Copper Creek was converted to DVC. Part of GF was converted to DVC. Ft. Wilderness Cabins are being converted to DVC. To get Disney to 2042, I could see Disney adding on to Bay Lake Tower, which won't reduce inventory but no new association needed. Then taking another wing of Wilderness Lodge and adding it to Copper Creek. Same with more of Jambo House and adding it to AKL. That should last them until 2042.

A resort Disney may extend is Hilton Head and Vero Beach, simply because they don't want to deal with them for a while. They may not want the optics of selling Hilton Head or Vero Beach to another company.

 

[intamin]

I don't think Disney will have problems selling DVC rooms as hotel rooms, especially within walking distance to EPCOT. Keep in mind DVC are hotel rooms. They represent a demand for hotel rooms. Even without DVC, people will want to stay at those resorts. DVC owners just happen to stay in the DVC side intead of the hotel side. Also with the hotel rates, Disney actually gets additional revenue since rental of DVC rooms means they will cover more than maintenance - it will generate profit. Currently Disney doesn't really get any revenue from renting out the DVC resorts - that was pretty much exhausted with DVC sales. Dues just cover actual maintenance costs.

Hypothetical scenerio:

2042, BR, BC, and BW go off-line from DVC. BC and BR stay open as hotel stays. That's still revenue for Disney. They shut down boardwalk and rebuild taking 2-3 years (2042, 2043, and part of 2044). 2044 Boardwalk goes online for sales. Beach Club is then shut down for demolition and opening in 2047. Then BR is shut down for demolition and opening in 2050.

In the meantime, they have already slashed hotel inventory. Copper Creek was converted to DVC. Part of GF was converted to DVC. Ft. Wilderness Cabins are being converted to DVC. To get Disney to 2042, I could see Disney adding on to Bay Lake Tower, which won't reduce inventory but no new association needed. Then taking another wing of Wilderness Lodge and adding it to Copper Creek. Same with more of Jambo House and adding it to AKL. That should last them until 2042.

A resort Disney may extend is Hilton Head and Vero Beach, simply because they don't want to deal with them for a while. They may not want the optics of selling Hilton Head or Vero Beach to another company.

I wonder how many people would even extend their contracts at VB/HHI, the dues there are already pretty absurd and they struggled selling them the first time which is why they had to subsidize some of the VB contracts. They’re also the closest ones to becoming worthless in the DVC system at this point. I doubt many people would opt to extend theirs at this point.

 

[sethschroeder]

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

As its in active sales right now. When it sells out in 2025ish then its price will rebound like any other resort. VGF resale prices had the floor drop out and so will POLY when that goes on sale.

BLT $137 vs BCV $127 vs BWV $121 in October

So has the BLT bubble burst? It was $173 last year in November.....

 

[sethschroeder]

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

Answering my own question:

Yes I would say OKW Extended is overpriced looking at the data.

OKWE - $126
OR
AKV $117
BWV $121
RIV $128
SS $111

150 point contract at OKWE means you would pay more at:
BLT - $1650 more
CCV - $2250 more

I mean the only contracts that I would say OKWE makes maybe more sense than at WDW would be POLY/VGF but both those are superior resorts and location by a fair margin and loved by their fans.

 

[tom1944]

As its in active sales right now. When it sells out in 2025ish then its price will rebound like any other resort. VGF resale prices had the floor drop out and so will POLY when that goes on sale.

BLT $137 vs BCV $127 vs BWV $121 in October

So has the BLT bubble burst? It was $173 last year in November.....

There were BLT deeds today for under $110. I think I saw one for $104 and one for $105. There was also one for $120 and one for $140.

I will go back and check again. I have been looking but not tracking because I do not plan to buy for a few months.

BLT
160 PTS FOR $120
240 FOR $105
126 FOR $104
100 FOR $130
210 FOR $140
300 FOR $120

 

[kneely58]

There were BLT deeds today for under $110. I think I saw one for $104 and one for $105. There was also one for $120 and one for $140.

I will go back and check again. I have been looking but not tracking because I do not plan to buy for a few months.

BLT
160 PTS FOR $120
240 FOR $105
126 FOR $104
100 FOR $130
210 FOR $140
300 FOR $120

Looks like these two were between the same buyer and seller:

240 FOR $105
126 FOR $104

 

[Sandisw]

Looks like these two were between the same buyer and seller:

240 FOR $105
126 FOR $104

Can you expand on this?

 

[intamin]

There were BLT deeds today for under $110. I think I saw one for $104 and one for $105. There was also one for $120 and one for $140.

I will go back and check again. I have been looking but not tracking because I do not plan to buy for a few months.

BLT
160 PTS FOR $120
240 FOR $105
126 FOR $104
100 FOR $130
210 FOR $140
300 FOR $120

Wow BLT is tanking hard. I wonder if it's because of impending renovation? Either way, that's far under what a monorail resort should be going for regardless of what you think of the theming

 

[kneely58]

Can you expand on this?

No problem. These were two deeds dated 11/24/23 that were recorded by Magic Vacation Title today with the same grantor and grantee (buyer and seller), so they appear to be part of the same overall transaction. The buyer may have gotten such a good deal because they were buying all 366 points. It was also a foreign seller.

 

[tom1944]

Looks like these two were between the same buyer and seller:

240 FOR $105
126 FOR $104

I went back to take a look. The LLC that purchased them has 264 deed transactions since 2015. Looks like they buy and sell these contracts.

 

[DonMacGregor]

I went back to take a look. The LLC that purchased them has 264 deed transactions since 2015. Looks like they buy and sell these contracts.

Nah, that never happens. It's just a financially savvy pair of retirees who smartly established an LLC in case one of them dies or they get divorced. Companies don't buy DVC contracts in volume (and they absolutely NEVER rent out points commercially).

 

[Chili327]

I suspect that a true pop will occur in 2030 or 2031 when DVC is no longer able to offer 10-year, fixed-rate mortgage financing for 2042 resorts.

And at some point, the value isn’t there, right?
When there is only a certain number of years left, renting or even just cash rooms become on the same level.
How many years left on a contract makes it basically upside down? (Dues will force that at some point won’t it?)

 

[sethschroeder]

And at some point, the value isn’t there, right?
When there is only a certain number of years left, renting or even just cash rooms become on the same level.
How many years left on a contract makes it basically upside down? (Dues will force that at some point won’t it?)

We have done the math and various people do it different ways but its within 10 years where its still coming out even. You wouldn't be upside down until only a few years left.

Yes not great deal but honestly the 6-15 years left is actually harder to possibly sell than 1-5 years.

Why?

Well 6-15 years you are looking at something "long term" and something that is viewed as an "investment" in future vacations.

With 1-5 years left that is close enough that you actively have planned the use of all those points (especially depending on how borrowing/banking rules unfold as we get closer).

 

[Chili327]

We have done the math and various people do it different ways but its within 10 years where its still coming out even. You wouldn't be upside down until only a few years left.

Yes not great deal but honestly the 6-15 years left is actually harder to possibly sell than 1-5 years.

Why?

Well 6-15 years you are looking at something "long term" and something that is viewed as an "investment" in future vacations.

With 1-5 years left that is close enough that you actively have planned the use of all those points (especially depending on how borrowing/banking rules unfold as we get closer).

Yea, that makes sense. 6-15 is an investment with a possible return (however small), but 1-5 you’re not even thinking of selling, you’re just going to ride it out to the end.

How do you even do the math to determine when it gets upside down?
Price per point x years left compared to cash or rental price?

 

[DVC4]

This is an excellent point.

I’ll just add for anybody like me, feeling major regret that they didn’t buy 7 years ago, it’d probably about 1.4x that in today’s dollars.

Amazing seeing these prices from 2015 and where they are today.