Here’s Why Resale Has Plenty of Room to Rise

[ldo]

So this is what so many commenting on value are missing, the human aspect. Everyone's situation is different....it would make perfect sense to sell DVC points to live on until the next chapter of my life was discovered.

This is us. We sold last July for a $25/point profit in 5 years-having DVC as a "liquid" asset let us easily free up cash during Covid. Kids are in college, and we thought why not cash out. But by Feb. our circumstances had changed, and we wanted our AKV points back. We still had a small DVC contract, but decided the hassle/cost of transferring points outweighed just repurchasing at $25 more than we sold for. We got partial (free) loaded points, which I valued at $5 off of purchase price, and 2021 points (including annual fees) are $10 less than the transfer rate,. That is real $ we would've paid out in the next year. So, we are repurchasing at current pricing. IMHO, each year we use our points instead of getting a transfer knocks another $10 off purchase pricing, so I'm back to my selling price in 2 years or so. I'm OK with that.

 

[sethschroeder]

The OP continues to ignore that selling a DVC contract means it has to be replaced with something. Seriously, is the OP suggesting I am not going to vacation?

So then its not overpriced enough is the point. If it was too costly then you would sell and go on vacation somewhere else.

And if you sell to recover that equity, what are you going to do with that equity?

Rent and invest the money just like someone who is looking to buy right now.

We have been looking to possibly buy homes that are not inflated as much to cash out the inflated equity in our home right now as an example.

 

[theww228]

If I buy a painting at a yard sale for $10 and it turns out to be worth $100k and I decide to keep it, it is the same as saying that I am willing to pay $100k for it. There is a lot of talk about the the emotional side of it. Yes, people do add value due to emotionality. If I found out my grandfather painted the picture I might consider keeping it. The earlier example of the property that was purchased at a small price and is now worth $1.5M actually makes the point. Regardless of the purchase price, it is now worth $1.5M. If they don’t sell, then they feel it is worth that amount. If they want to keep it because it was “in the family” they are adding that emotionality to the equation as part of the value.
I think the points are high, but I am not selling because the alternative propositions are not worth it to me. Renting points, staying cash or skipping Disney for something else. My points would easily sell for $135k, which I think is crazy, but I don’t sell them because there isn’t a good alternative. Back to the OP’s point, there are many of us that think the prices are crazy, but we aren’t selling at the high prices so we still see the “value” (note: everyone has their own definition of value for them), so it appears that there continue to be plenty of room to rise.

 

[Drewski77]

If I buy a painting at a yard sale for $10 and it turns out to be worth $100k and I decide to keep it, it is the same as saying that I am willing to pay $100k for it. There is a lot of talk about the the emotional side of it. Yes, people do add value due to emotionality. If I found out my grandfather painted the picture I might consider keeping it. The earlier example of the property that was purchased at a small price and is now worth $1.5M actually makes the point. Regardless of the purchase price, it is now worth $1.5M. If they don’t sell, then they feel it is worth that amount. If they want to keep it because it was “in the family” they are adding that emotionality to the equation as part of the value.
I think the points are high, but I am not selling because the alternative propositions are not worth it to me. Renting points, staying cash or skipping Disney for something else. My points would easily sell for $135k, which I think is crazy, but I don’t sell them because there isn’t a good alternative. Back to the OP’s point, there are many of us that think the prices are crazy, but we aren’t selling at the high prices so we still see the “value” (note: everyone has their own definition of value for them), so it appears that there continue to be plenty of room to rise.

Well said, better than I did!

 

[Lorana]

If I buy a painting at a yard sale for $10 and it turns out to be worth $100k and I decide to keep it, it is the same as saying that I am willing to pay $100k for it.

That doesn’t make logical sense. I was willing to pay $10 and that’s what I spent on it. It doesn’t mean I’d pay $100k for it just because it then becomes valued at that amount, even if I chose not to sell it, because if I had $100k in hand i may not feel that painting is worth that kind of expense and spend it elsewhere. But if I paid $10 for it and it’s now worth $100k, that’s a different equation, because I only actually spent $10 on it. I’m not OUT $100k. I’m out $10 and haven’t REALIZED the gain. The reason for keeping it may very well be emotional - I really like this painting, it was painted by someone I knew, I want the prestige of owning a $100k painting, I have no need for the money, etc etc. There could be many reasons why I don’t sell.

in the examples of the house

Regardless of the purchase price, it is now worth $1.5M. If they don’t sell, then they feel it is worth that amount.

Or… they still need a place to live. The house has value - monetary value too - beyond its selling price. And to sell and rebuy a new home might cost the owner more than the money they’d get from selling.

In your example of the painting, I’d likely sell unless I had an emotional attachment to the painting, because it’s value is so high (or unless I thought the value would continue to rise if I held onto it for longer. Is that after all what we do with stocks? If I bought a stock for $10 and it’s now worth $1000 I might never buy for that amount, but I might hold onto it if market trends tell me it might be worth $10,000 in 10 years.)

But with DVC, I’m not selling because there are other monetary value equations here at play, including the initial cost that I’m out that may be significantly less than the current value, not to mention the monetary value I get from using it. If I am still using points, my reason for not selling has nothing to do with current valuation and everything to do with the value the points give me.

 

[CarolMN]

To me, this "argument" does not make sense. I cannot replace what I have with another resale contract, because there are no comparable resale contracts available. My current contract has benefits that the currently available contracts do not have. Those benefits have value to me.

Of course I would not sell what I have, even though it is "worth" more than double what I originally paid. I still want to use the product. The comparable product is NOT another resale. To replace what I have, I would have to purchase a direct contract. Direct prices are much higher than the current value of my contract.

 

[Bearval]

That doesn’t make logical sense. I was willing to pay $10 and that’s what I spent on it. It doesn’t mean I’d pay $100k for it just because it then becomes valued at that amount, even if I chose not to sell it, because if I had $100k in hand i may not feel that painting is worth that kind of expense and spend it elsewhere. But if I paid $10 for it and it’s now worth $100k, that’s a different equation, because I only actually spent $10 on it. I’m not OUT $100k. I’m out $10 and haven’t REALIZED the gain. The reason for keeping it may very well be emotional - I really like this painting, it was painted by someone I knew, I want the prestige of owning a $100k painting, I have no need for the money, etc etc. There could be many reasons why I don’t sell.

in the examples of the house

Or… they still need a place to live. The house has value - monetary value too - beyond its selling price. And to sell and rebuy a new home might cost the owner more than the money they’d get from selling.

In your example of the painting, I’d likely sell unless I had an emotional attachment to the painting, because it’s value is so high (or unless I thought the value would continue to rise if I held onto it for longer. Is that after all what we do with stocks? If I bought a stock for $10 and it’s now worth $1000 I might never buy for that amount, but I might hold onto it if market trends tell me it might be worth $10,000 in 10 years.)

But with DVC, I’m not selling because there are other monetary value equations here at play, including the initial cost that I’m out that may be significantly less than the current value, not to mention the monetary value I get from using it. If I am still using points, my reason for not selling has nothing to do with current valuation and everything to do with the value the points give me.

We have all been trolled by the OP, this thread needs to be closed. If I bought a Picasso drawing at a yard sale for 10 bucks because I liked it and found out it was worth 10k if I don't sell it that no way implies I would buy it for 10k.

 

[Robert Stoddart]

To me, this "argument" does not make sense. I cannot replace what I have with another resale contract, because there are no comparable resale contracts available. My current contract has benefits that the currently available contracts do not have. Those benefits have value to me.

Of course I would not sell what I have, even though it is "worth" more than double what I originally paid. I still want to use the product. The comparable product is NOT another resale. To replace what I have, I would have to purchase a direct contract. Direct prices are much higher than the current value of my contract.

This is exactly correct - resale today is not the same as resale from several years ago. An argument can be made as to the value of those benefits, but direct points are the only comparison. So I could sell my VGF contract for $190, but cannot replace it for even close to that price.

 

[Drewski77]

We have all been trolled by the OP, this thread needs to be closed. If I bought a Picasso drawing at a yard sale for 10 bucks because I liked it and found out it was worth 10k if I don't sell it that no way implies I would buy it for 10k.

Yard sale example was not the OP, (me) although I do agree with it.

And a difference of opinion is not a troll, it is just…a difference of opinion.

 

[Drewski77]

To me, this "argument" does not make sense. I cannot replace what I have with another resale contract, because there are no comparable resale contracts available. My current contract has benefits that the currently available contracts do not have. Those benefits have value to me.

Of course I would not sell what I have, even though it is "worth" more than double what I originally paid. I still want to use the product. The comparable product is NOT another resale. To replace what I have, I would have to purchase a direct contract. Direct prices are much higher than the current value of my contract.

If resale goes up enough you certainly can replace what you have by booking directly with Disney, and having so much left over from selling to pay for all your Disney purchases without worrying about blue card discounts.

There is still value in the primary reason people buy into DVC…to save money on future vacations. Especially at the less expensive resale route.

And it is for this reason (the primary one) that I don’t think DVC is overvalued.

And why I don’t get the logic of how others wouldn’t sell because of the value DVC brings them…but say they wouldn’t buy because DVC doesn’t provide enough value to purchase.

And definitely no trolling or offense, just another way that a fellow happy DVC owner looks at things.

 

[sethschroeder]

But if I paid $10 for it and it’s now worth $100k, that’s a different equation, because I only actually spent $10 on it. I’m not OUT $100k.

I think there is a misunderstanding. By not selling the painting you are absolutely out $100k of liquid assets. It doesn't matter that you spent $10/$100k/$1m on the painting your total assets is measured by that value.

To me, this "argument" does not make sense. I cannot replace what I have with another resale contract, because there are no comparable resale contracts available

Here an extreme example if someone said they would pay you $1000/point but in the contract it restricted you from buying DVC again would you do? By your comment you wouldn't even sell then.

resale today is not the same as resale from several years ago.

The question would be what is the value of losing whatever benefit you have. How much is that worth to you? That would then set the baseline for everything from current resale vs direct discussion, renting vs owning, and cash vs dvc.

So my question is what is the dollar amount for you? Either per point or in total?

 

[upritbass]

I think there is a misunderstanding. By not selling the painting you are absolutely out $100k of liquid assets.

So what? $xxxk of liquid assets is merely a concept until you actually USE it for something. But if you use it, you no longer have the liquid assets which is apparently bad. And round and round it goes.

Here's a real example: I bought APPL at $25 and sold at $50. I made a KILLING, doubled my money. Great, right? Nope, stupidest decision I ever made.

Another real example of the saddest words I ever heard: "I saved all that money and never took the time to enjoy it."

 

[808blessing]

Value and worth are two different things. Unknown variables: future cost of dues, future rental price and future room cost.
We can’t determine value objectively with one right answer and say it is overvalued because that is subjective.
Hmm I better go watch Shark Tank again. I’m still swimming and processing. I get what OP is saying but I “feel” what the others are saying too.

 

[sethschroeder]

So what? $xxxk of liquid assets is merely a concept until you actually USE it for something. But if you use it, you no longer have the liquid assets which is apparently bad. And round and round it goes.

Here's a real example: I bought APPL at $25 and sold at $50. I made a KILLING, doubled my money. Great, right? Nope, stupidest decision I ever made.

Another real example of the saddest words I ever heard: "I saved all that money and never took the time to enjoy it."

Where did I say it was smarter to cash out of DVC? I never said such.

In the end the whole point is simply that if you don't cash out then you are supporting the idea that DVC is worth $xxx/point amount compared to other options long term.

As an example Apple could have also crashed or you could have put that money in Doge and made even more. The point is you are evaluating and making what you think is the best decision. Just like with DVC it could keep going up in value, it could keep being a cheaper way to go to Disney, or it could all crash to earth and be overpriced in comparison to other options.

By holding you are saying your points are worth more than current market value.

 

[Drewski77]

Where did I say it was smarter to cash out of DVC? I never said such.

In the end the whole point is simply that if you don't cash out then you are supporting the idea that DVC is worth $xxx/point amount compared to other options long term.

As an example Apple could have also crashed or you could have put that money in Doge and made even more. The point is you are evaluating and making what you think is the best decision. Just like with DVC it could keep going up in value, it could keep being a cheaper way to go to Disney, or it could all crash to earth and be overpriced in comparison to other options.

By holding you are saying your points are worth more than current market value.

I agree, and it’s not a binary choice to own DVC or never stay in the exact same DVC resorts.

DVC is a way to prepay for future Disney vacations with the idea you will save money (long term) over booking cash rooms with Disney every year.

If you don’t sell your contracts, (I am not) you are making a judgment that current prices still offer value for future vacations compared to booking direct with Disney each year.

And the determination of the future value from DVC is based on what you could sell it for today, not what you paid previously.

 

[lovethesun12]

For anyone considering buying solely based on this logic, just putting it out there that they have plenty of room to drop as well.

 

[Drewski77]

For anyone considering buying solely based on this logic, just putting it out there that they have plenty of room to drop as well.

No matter what logic or reasons someone uses to buy DVC there is plenty of room to drop…that reality isn’t unique to any one reason as to why DVC could keep going up in value.

 

[Ssplashhmtn]

We have all been trolled by the OP, this thread needs to be closed. If I bought a Picasso drawing at a yard sale for 10 bucks because I liked it and found out it was worth 10k if I don't sell it that no way implies I would buy it for 10k.

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.

 

[lovethesun12]

No matter what logic or reasons someone uses to buy DVC there is plenty of room to drop…that reality isn’t unique to any one reason as to why DVC could keep going up in value.

No it isn't. But in your original post you mentioned that you knew that the increase in prices has room to run because owners weren't currently selling, and the title of the thread is why resale has plenty of room to rise, not plenty of room to rise or fall.

 

[Drewski77]

No it isn't. But in your original post you mentioned that you knew that the increase in prices has room to run because owners weren't currently selling, and the title of the thread is why resale has plenty of room to rise, not plenty of room to rise or fall.

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.