Here’s Why Resale Has Plenty of Room to Rise

[sethschroeder]

You regularly hold up Riviera’s cash price

I have never talked about Riviera's cash price being related to anything. I honestly think Riviera's cash price has about 0% correlation to anything long term since it will only be 2%-5% or so of the resort.

In addition much of the time I even talk about buying Riviera I point out I bought for $155/point so it clarifies why I bought direct.

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.

Detriment? They have continuously went up for 50 years. I like my chances long term of room rates to continue to increase. So I stand by direct prices/cash rates keeping up their end to the equation.

Again lots of things can add to this equation and this thread was more specific to one part of the larger equation in that people saying "its over priced" and "I wouldn't buy" still hold on to their points thus not impacting the resale pricing.

 

[Judique]

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

???? I bought it to consume, not as an investment.

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 agree with this. Now retired, I'm at a different place in my life, and buying into timeshares is not part of the long term plan, although I still get the addonitis twinge occasionally. I've also long since recouped the value of my initial outlay and now I'm 'just paying my dues'. Actual point cost written off.

Detriment? They have continuously went up for 50 years. I like my chances long term of room rates to continue to increase. So I stand by direct prices/cash rates keeping up their end to the equation.

Again lots of things can add to this equation and this thread was more specific to one part of the larger equation in that people saying "its over priced" and "I wouldn't buy" still hold on to their points thus not impacting the resale pricing.

I think you misunderstood @Bing Showei - but I could be wrong. He didn't say 'detriment'. He said 'determinant'.

 

[zavandor]

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.

No, I wouldn't. Which is the point of my post.

 

[Drewski77]

???? I bought it to consume, not as an investment.

I think most people buy into DVC as a way to consume Disney accommodations at a discounted rate over the longterm, myself included.

If what we pay for Disney accommodations didn’t matter, then why buy into DVC in the first place, just book cash rooms through Disney.

And to calculate the current discount DVC brings on future vacations, that is based our current equity, not what we paid.

 

[Drewski77]

No, I wouldn't. Which is the point of my post.

Great, thanks for answering.

 

[Sandisw]

I think most people buy into DVC as a way to consume Disney accommodations at a discounted rate over the longterm, myself included.

If what we pay for Disney accommodations didn’t matter, then why buy into DVC in the first place, just book cash rooms through Disney.

And to calculate the current discount DVC brings on future vacations, that is based our current equity, not what we paid.

Going to agree to disagree as that makes no sense to me that my discount is not based on the actual money I spent but on money I didn’t.

 

[Drewski77]

Going to agree to disagree as that makes no sense to me that my discount is not based on the actual money I spent but on money I didn’t.

Because the discount for the remainder of the contract is about the equity you have today and holding onto your contract…versus selling and using a different option to book your future Disney stays with the proceeds from selling.

You and many others look at it differently, and on that we do agree…to disagree.

 

[Robert Stoddart]

The disconnect for me is that the list price of resale is not the same as the money that will end up in my bank account. Commissions and taxes are not insignificant.

 

[Drewski77]

The disconnect for me is that the list price of resale is not the same as the money that will end up in my bank account. Commissions and taxes are not insignificant.

That is a fair point, it’s more about net proceeds.

With that said, I do doubt that commissions and taxes are the main driver of why people decide to hold or sell.

 

[DougEMG]

Resale owners have only ever effected the market price once before and that was in 2010-2012 when too many of them were trying to sell, the market got flooded with contracts and the price in resale collapsed. Buyers like myself swooped in and cleaned up buying contracts back then. What stopped the prices from completely collapsing completely was that buyers like myself got into bidding wars over really cheap contracts.

There is really only 1 thing that drives the price of resale up and that is the price of direct and that is driven by the price of onsite hotels and the amount of potential savings that people think they will get over paying for cash stays. Everything else is very minor in comparison.

 

[Bing Showei]

I have never talked about Riviera's cash price being related to anything.

I stand corrected. My apologies.

Detriment? They have continuously went up for 50 years. I like my chances long term of room rates to continue to increase. So I stand by direct prices/cash rates keeping up their end to the equation.

Again lots of things can add to this equation and this thread was more specific to one part of the larger equation in that people saying "its over priced" and "I wouldn't buy" still hold on to their points thus not impacting the resale pricing.

I agree that direct prices are part of the equation. I agree that supply side is part of the equation. I just disagree when the blanket statement is made that if you’re not selling today, you’re essentially buying today when it is applied to the Disney timeshare resale market.

If we were talking about a product that was a one for one exchange (like stocks), I would agree. If I felt DIS wasn’t worth $178/share, or believe it had no room to run, I’d sell. By holding on to my stocks, I’m stating unequivocally that if given the cash equivalent of my shares instead, I would use that cash to buy back in today.

But Disney’s timeshare is not that, so the assertion that an owner is being illogical to state that a resale SSR contract is overvalued at $125 but won’t sell requires looking at the Disney’s timeshare product in a vacuum.

As long as the direct/cash alternative price increases, resale will rise. Most owners probably hold on because they’re still using the product, and save for VGC, no matter the resale price, it will always be cheaper than the alternative.

That being said, I’m guessing most owners outside of just a handful of owners even within this DISboard bubble (which probably accounts for 97% of resale owners - yes, I pulled that number out of my ***) don’t do a per night calculation comparisons every time they vacation.

Resale market prices more closely track the direct equivalent and are far more effected by behemoth brokers like DVCRM than by people sitting around making $/night/stay equivalency calculations.

Most owners (97% - per my ***) are holding on until they no longer want to go to Disney.

Do I want to continue going to Disney? Yes, or no.

That’s the simple binary valuation of the product dictating the majority of the supply side. To believe otherwise is to grossly overestimate the representation of owners on these boards as a larger share of the ownership.

 

[Bearval]

I stand corrected. My apologies.

I agree that direct prices are part of the equation. I agree that supply side is part of the equation. I just disagree when the blanket statement is made that if you’re not selling today, you’re essentially buying today when it is applied to the Disney timeshare resale market.

If we were talking about a product that was a one for one exchange (like stocks), I would agree. If I felt DIS wasn’t worth $178/share, or believe it had no room to run, I’d sell. By holding on to my stocks, I’m stating unequivocally that if given the cash equivalent of my shares instead, I would use that cash to buy back in today.

But Disney’s timeshare is not that, so the assertion that an owner is being illogical to state that a resale SSR contract is overvalued at $125 but won’t sell requires looking at the Disney’s timeshare product in a vacuum.

As long as the direct/cash alternative price increases, resale will rise. Most owners probably hold on because they’re still using the product, and save for VGC, no matter the resale price, it will always be cheaper than the alternative.

That being said, I’m guessing most owners outside of just a handful of owners even within this DISboard bubble (which probably accounts for 97% of resale owners - yes, I pulled that number out of my ***) don’t do a per night calculation comparisons every time they vacation.

Resale market prices more closely track the direct equivalent and are far more effected by behemoth brokers like DVCRM than by people sitting around making $/night/stay equivalency calculations.

Most owners (97% - per my ***) are holding on until they no longer want to go to Disney.

Do I want to continue going to Disney? Yes, or no.

That’s the simple binary valuation of the product dictating the majority of the supply side. To believe otherwise is to grossly overestimate the representation of owners on these boards as a larger share of the ownership.

I think you hit the nail on the head.

 

[kilik64]

Resale owners have only ever effected the market price once before and that was in 2010-2012 when too many of them were trying to sell, the market got flooded with contracts and the price in resale collapsed. Buyers like myself swooped in and cleaned up buying contracts back then. What stopped the prices from completely collapsing completely was that buyers like myself got into bidding wars over really cheap contracts.

There is really only 1 thing that drives the price of resale up and that is the price of direct and that is driven by the price of onsite hotels and the amount of potential savings that people think they will get over paying for cash stays. Everything else is very minor in comparison.

What happened in 2010-2012 to cause that?

 

[Bearval]

What happened in 2010-2012 to cause that?

Tail end of the 2008-2009 great recession. People were selling because the needed the money or couldn't afford the yearly maintenance fees or the monthly mortgage if they financed.

 

[upritbass]

What happened in 2010-2012 to cause that?

Recession?

Bearval beat me by a few seconds….

 

[kilik64]

Yea makes sense, just figured that would have hit earlier then that and not as long. Thanks!

 

[Lorana]

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

But that is still not the same thing as a willingness to buy at the current price point, which was the presumption of this whole thread. It is only an unwillingness to sell, and stating that the unwillingness to sell is only because it's not a price point that we would want to sell at ignores the lost value from seller and closing fees, the loss of usage of the product, and the loss of differences in the product from what was originally purchased.

I would absolutely be willing to sell my VGC for $270/point - I'd make $75/point before deducting seller fees - but I won't sell because two small VGC contracts are hard to come buy, I'd lose that usage, and it's nigh impossible to book at 7 months so I need to own there. I was absolutely willing to buy at $195/point. If I had to buy now, I would lament that I'll never own at VGC, but I won't buy in at those prices. And I couldn't buy back if I sold because I'd be out the seller fees, so I would have to buy less than what I initially had. I'm not holding onto my contract because I think the price to sell is unreasonable, but because the cash value can't replace the other value I get from these contracts.

Do I want to continue going to Disney? Yes, or no.

Yes. And that is the primary reason I won't sell.
(That, and I don't need the cash. If I needed to liquidate assets, the answer might be yes, and then I might sell. But in that case, I'm not selling based on the resale price, but based on a need outside it for needing cash.)

 

[Bearval]

But that is still not the same thing as a willingness to buy at the current price point, which was the presumption of this whole thread. It is only an unwillingness to sell, and stating that the unwillingness to sell is only because it's not a price point that we would want to sell at ignores the lost value from seller and closing fees, the loss of usage of the product, and the loss of differences in the product from what was originally purchased.

I would absolutely be willing to sell my VGC for $270/point - I'd make $75/point before deducting seller fees - but I won't sell because two small VGC contracts are hard to come buy, I'd lose that usage, and it's nigh impossible to book at 7 months so I need to own there. I was absolutely willing to buy at $195/point. If I had to buy now, I would lament that I'll never own at VGC, but I won't buy in at those prices. And I couldn't buy back if I sold because I'd be out the seller fees, so I would have to buy less than what I initially had. I'm not holding onto my contract because I think the price to sell is unreasonable, but because the cash value can't replace the other value I get from these contracts.

The need to sell is the largest underlying reason why people sell in the 1st place and is not so much driven on the current price people are willing to pay. The reasons can range from they need the money for something else or they no longer have a desire to vacation in Orlando.

Yes. And that is the primary reason I won't sell.
(That, and I don't need the cash. If I needed to liquidate assets, the answer might be yes, and then I might sell. But in that case, I'm not selling based on the resale price, but based on a need outside it for needing cash.)

 

[Bruggok]

I will offer a bad analogy to OP's point. I will telling my wife "since you are staying married to me, if we discovered that our marriage record/certificate evaporated into thin air one day, you would marry me again in an instant?" I am fairly sure she would not immediately say yes, but perhaps after a few seconds of consideration.

Hopefully this helps to illustrate that people generally do not have a "knife edge", where on one side they'd say yes/buy and the other they'd say no/sell, but rather a continuum of likely yes <> maybe yes <> maybe <> maybe no <> likely no. This, I believe, may be why OP's point is so difficult to understand, because most people do not think and make decisions on a digital 0 or 1, true or false level.

 

[Lorana]

This, I believe, may be why OP's point is so difficult to understand, because most people do not think and make decisions on a digital 0 or 1, true or false level.

That, and it's on the presumption that there's no value to DVC other than the price per point you'd pay to buy or sell, and that there's no fees or costs associated with either (since seller fees immediately make it impossible to sell and then rebuy exactly what you'd have; you'd end up with less points at the very least). It makes a presumption that unwillingness to sell at current price point is the same as willingness to buy at the current price, which is a false equivalency. For some, it may correlate to the same, but (as they say) "correlation is not causation."