All awesome information - I feel a recession would lower resale costs, but leave direct costs unchanged. Disney does not lower their prices - ever.
Not entirely true. VB dropped from $115 to $100 per point in January of 2018. I know this sounds nit-picky and for that I apologize, but the precedent has been set for Disney to not only offer sales incentives but to lower their prices as well.
Hi I am new to this forum (registered just so I could respond to this post) and am doing research for a DVC direct sale purchase. I don't have a great understanding of the stock market or real estate in general but I do crunch numbers and look out for the long term.
This is the first I have seen or read of anything pertaining to this specific topic and was wondering if you could explain what this means further? Are you saying that the rise of prices for DVC in points and dues could eventually lead to being equal to the cost of staying at the resort as a normal cash reservation? If I am reading this right it seems that you are saying by buying let's say $16,000 worth of points that by the time we have used those points that they actually break even for the "discount" involved the per point prices at that point will match the cash reservation prices.
Great question. I'll oversimplify my answer and then get more detailed if you need me to. I'm not saying exactly that. I don't think that at any point in time the dues will become so high that in any one year it would be cheaper to book a room directly with Disney than it would be to pay the dues on the points used to book a similar room with DVC.
What I'm saying is more long term. Basically, when you buy DVC (direct or resale) you are prepaying for the membership and the right to stay for less for each upcoming vacation. So let's say in year one you spend $15,000 to purchase DVC and another $600 in dues to stay for five nights at a DVC resort. You've spent $10,300 in year one. Compare that to someone who just booked a hotel room and spent $1,800 for those five nights and you've paid more. But each year going forward, you will be spending roughly $600 in dues and the person who didn't buy will spend roughly $1,800 to book the room directly. Each year they are paying $1,200 more than you and eventually there will be a crossover point where they have spent more in total than you have. From that point on you are winning by buying DVC.
The point I'm trying to make is that given the totality of the options available, the prices today are too high and we are close to breaching the value proposition of owning DVC, if we haven't already. Based on today's prices, the amount of time it takes for that crossover point to be reached is so far out that it is close to exceeding the life of the contract at resorts with a 2042 expiration date. When that happens, prices will have to come down in order for it to be more cost-effective to purchase DVC. Otherwise, there is a chance that you will never come out ahead financially by purchasing DVC. I would suggest that we have already reached that point in certain situations, such as a direct purchase at BCV.
As far as the newer resorts, the amount of time it takes to break even is much longer based on the higher price. The one huge flaw in my theory is that if at any point you sell your contract, the numbers skew way back in favor of purchasing vs. renting, regardless of whether or not it is direct or resale. It all depends on how much of your initial purchase price you get back. And that is why the 2042 dates and the resale restrictions are so important. Expiration and restrictions both have a very negative impact on resale value. If the value goes down too much, then owners get hurt badly on the exit. That doesn't matter to Disney, but it matters to all of us a whole lot.
Thanks for the question and I hope this helps.
Waiting is hard, lol.
