Poll: Has the 2042 Bubble Burst?

[HyperspaceMountainPilot]

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?

I think technically it would be use value per point minus dues per point x number of years, discounted by the time value of money (usually based against prevailing treasury bonds), though you may not need to use the time value of money because cash booking rates increase much faster than dues and generally higher than prevailing inflation rates.

You could calculate the “value per point” by cost of renting or by cost of rack rates or rack rates with a 20-30% discount, depending on what you want to justify (and frankly, time of year is probably a factor). For the hard to rent properties, I think the midpoint between point rental cost and retail cost (in busy season) or discount retail (in slow season) is probably about right.

 

[AnnaKristoff2013]

I think Disney will have to be careful. It is a lot of resorts expiring at once, with many different utilities and uses. Also, most customers are going to ask why is Boardwalk going from 9 points a night to 19 points a night without significant upgrades/enhancements.

They could stagger out the purchasing/Reno process, but that is going to cost them money too. Right now those rooms generate revenue in many ways. If the resort is closed, that will be different.

WDW just completed its 50th Anniversary. The Contemporary was there for all 50 years, and I do not know of any immediate plans to demolish it. I point that out to say, WDW may be loathe to demolish the boardwalk resort, or the DVC Beach Club building or whatever just because it is 50 years old.

I maintain the most likely outcome is that they will switch to a “portfolio program” where all the points are placed in trust and you no longer have a home resort but access to a certain number of points in the trust. Trying to have buyers buy into a choice between OKW, Beach Club, Boardwalk, Boulder Ridge, to say nothing of HHI and VB all at once seems way too complicated. This may happen well before 2042 or it may happen right around then. I think that’s the cleanest way to do it around the 2042 expiration though, just switch ALL of the expiring resorts into a new program Which basically eliminates the deeded access to a home resort.

Given the DVC survey that just went out, this 2 week old post looks awfully prescient.

 

[AnnaKristoff2013]

When it sells out in 2025ish then its price will rebound like any other resort.

I really think people underestimate how those resale restrictions hurt Riviera. There's no reason to think it will rebound just because other properties like BLT & GFV did. BLT & GFV make great sleep around points with low maintenance fees. Riviera can never be used as SAP resale.

 

[maui22]

In 2042, will people with expiring resorts stop going to Disney?

If they keep going, will Disney hotels benefit (smaller discounting)? Or maybe other DVC properties will benefit (purchases/renting)?

 

[Sandisw]

In 2042, will people with expiring resorts stop going to Disney?

If they keep going, will Disney hotels benefit (smaller discounting)? Or maybe other DVC properties will benefit (purchases/renting)?

It al depends but as people get older and stop going, just as many, if not more, new and younger families visit. Whether the upcoming generations would find a product like DVD beneficial? Who knows.

I think it depends on what they decide to do with the program and changes they make....

 

[sethschroeder]

I really think people underestimate how those resale restrictions hurt Riviera.

I think you over estimate it if you think the price is only get cheaper when the resort sells out. I will point out people said it wouldn't sell direct either yet it outsold CCV up until COVID. Its outsold VGF certain months this year based on incentives. It also sold already at resale drastically higher than the majority thought as well.

no reason to think it will rebound

Its just how markets work. Right now you have the direct offering discounted pushing the resale price down.

People already buy VGF, BCV, VGC to just stay at those resorts. People who buy RIV will be buying to stay there at an Epcot resort with a longer life (young families as an example which make up lots of the resale market).

So while the resale price will be a larger discount over the direct price it will absolutely bump up when its sold out. Even more so as we get closer and closer to 2042.

You might be a MK lover but there are plenty of Epcot lovers who will only buy in to stay around Epcot.

GFV make great sleep around points

So people were buying VGF at $185 for SAP? I dont buy that for a second. You are going to see a large spike from VGF coming up as its now sold out. If there isn't a spike you will see a dip from the rest of the resorts.

It was always SSR/OKW/AKV as the 3 to get for SAP and it wasn't really close.


Most of the RIV stuff was covered a ton before you were a member with people trying to downplay it yet its seemingly out performed along the way compared to what many thought. I have covered previously as well how the trading system will be impacted by the 2042 expirations and only MK resorts left to trade among regarding resorts connected to parks by something other than a bus in addition to a large bump % wise for SSR/OKW/AUL share of the resale points that can trade.

 

[intamin]

I think you over estimate it if you think the price is only get cheaper when the resort sells out. I will point out people said it wouldn't sell direct either yet it outsold CCV up until COVID. Its outsold VGF certain months this year based on incentives. It also sold already at resale drastically higher than the majority thought as well.



Its just how markets work. Right now you have the direct offering discounted pushing the resale price down.

People already buy VGF, BCV, VGC to just stay at those resorts. People who buy RIV will be buying to stay there at an Epcot resort with a longer life (young families as an example which make up lots of the resale market).

So while the resale price will be a larger discount over the direct price it will absolutely bump up when its sold out. Even more so as we get closer and closer to 2042.

You might be a MK lover but there are plenty of Epcot lovers who will only buy in to stay around Epcot.



So people were buying VGF at $185 for SAP? I dont buy that for a second. You are going to see a large spike from VGF coming up as its now sold out. If there isn't a spike you will see a dip from the rest of the resorts.

It was always SSR/OKW/AKV as the 3 to get for SAP and it wasn't really close.


Most of the RIV stuff was covered a ton before you were a member with people trying to downplay it yet its seemingly out performed along the way compared to what many thought. I have covered previously as well how the trading system will be impacted by the 2042 expirations and only MK resorts left to trade among regarding resorts connected to parks by something other than a bus in addition to a large bump % wise for SSR/OKW/AUL share of the resale points that can trade.

You basically summed up my partner and I. It seems like my other comment disappeared but as much as we love the 2042 Epcot resorts, having 28 years extra on RIV just made more sense for us. I want to be able to have something to pass down to my kids past their 16th birthday. It’s not like owning direct RIV prevents me from booking BCV/BWV at 7 months. I may not always get a BCV/BWV studios even though I’ve gotten them multiple times I’m perfectly fine using any of my points at BCV/BWV on a 1BR there for a little easier availability.
but at least we can guarantee an Epcot/HS area stay with RIV. We also happen to like the accomodations at RIV more anyways so if we got “stuck” at our home resort we would be perfectly content.

 

[walt34]

So people were buying VGF at $185 for SAP? I dont buy that for a second. You are going to see a large spike from VGF coming up as its now sold out. If there isn't a spike you will see a dip from the rest of the resorts.

It was always SSR/OKW/AKV as the 3 to get for SAP and it wasn't really close.

VGF might not prove a bad choice for SAP: The dues are $2.30 lower than OKW and if the resale price for VGF goes up, the gap between purchase price and what one can recoup on resale closes further.
The rising dues at OKW might put additional pressure on OKW resale prices.
VGF is mostly expensive if you stay there.

I think it is still too early to say whether RIV restrictions will significantly affect resale prices: that the resort is still in active marketing cuts both ways: on one side there are incentives and an attractive direct price, on the other side, the RIV still being in active marketing a lot adds to its attractiveness.

 

[Bearval]

Working on this month's DVC Resale Average Price blog, and I've noticed a startling trend with some of the 2042 resorts... In fact, Old Key West - Extended average pricing is now trending at or above BoardWalk, Beach Club, Boulder Ridge, Hilton Head, and Vero Beach.

So - Has the 2042 bubble burst with 19 years now left on the contracts? Look forward to everyone's thoughts!

I don't know about all of the resorts but i was just looking to book a weekend at HH ( i do not own points for HH) and it would be a total of 132 points for two nights for a 2 bedroom. Cash price with tax is $839.00 per night. If I use Disney gift cards purchased from BJs at a discount cash price drops to $793.00. What I find amazing is that if you own HH the maintenance fees ($11.31pp for 2024) for this room for one night is $747.00. It is getting to the point where the maintenance fees will exceed the cash price for this resort. If and when that happens you are going to be holding on to a DVC timeshare that is worthless regardless of how many years are left on the contract.

 

[AnnaKristoff2013]

It is getting to the point where the maintenance fees will exceed the cash price for this resort. If and when that happens you are going to be holding on to a DVC timeshare that is worthless regardless of how many years are left on the contract

The fate of most timeshares in the end. No reason to think DVC will be immune from this.

 

[Unclelude]

The fate of most timeshares in the end. No reason to think DVC will be immune from this.

What happens if you just stop paying dues.. I've seen posts about foreclosures in the county record keeping.

Does Disney come after you for back dues? Or do they just give up and take the points back? Could you be proactive and just 'surrender' the contract.

(Sadly I should understand this being an owner...)

 

[walt34]

The fate of most timeshares in the end. No reason to think DVC will be immune from this.

Well, the difference so far is Walt Disney World (and Disneyland): Most timeshares offer nice rooms in nice locations. The problem is, that there are many, many nice locations for new timeshare offerings. This devalues any existing (and ageing) building. The DVC resorts at WDW and DL operate in an environment with far less competition. As long as these locations remain attractive (within the Disney bubble, transportation,...), they will probably hold their value better than other timeshare offerings. DVC locations outside the Disney bubble face more intense pressure.

It will be interesting to see, what happens with HH and Vero as dues increase further. The regular room price is dictated by the market (what people are willing to pay) and not cost. But if there is an extended mismatch between market price and cost, something needs to give.

 

[AnnaKristoff2013]

What happens if you just stop paying dues.. I've seen posts about foreclosures in the county record keeping.

Does Disney come after you for back dues? Or do they just give up and take the points back? Could you be proactive and just 'surrender' the contract.

(Sadly I should understand this being an owner...)

Depends on the state. FL I believe has a non-judicial foreclosure process that does not allow deficiency judgments, so I don’t think they would come after you for dues. Based on posts on TUG, most timeshares seem to not go after you if it’s just dues you owe, and it’s hit or miss if you owe a mortgage as to whether that gets reported to a credit agency. However, there is no sure thing with this and ymmv.

If the question is about HHI or Aulani though, then it wouldn’t be FL law.

 

[Genie+]

OKW price dropping didn’t surprise me. Dues are high. Highest at WDW. Personally I couldn’t help lumping OKW in with VB/HHI when considering resale. Cheaper buy-in but risks dues exponentially increasing faster than WDW counterparts. My concern was the gap growing and growing year after year. Operational costs are at higher risk to increase too.

OKW shines in some areas. ~180 days out of a year studios cost 9-11pts. 1BR, 2BR and GV are humungous. The resort itself definitely has its fans. We like it. But… Those high dues make trading painful. I’d only buy here to use here and our forecast is 3+yrs between OKW stays, which makes it a no go even for a small contract.

VGF is our SAP points. This is the contract we intend using for trading out. It was also bought for home resort advantage, not solely an SAP contract. In the current DVC environment I would not risk buying a 100% SAP contract.

BWV’s 2042 expiration did not deter us. We’re likely to use to end. 99.5% certain to use 10 more years minimum. I’m not worried about price plummeting, partly because we don’t own alot of points here. BW could still see $80-$100pp sometime between 2030-34 though. Those dollars will be worth less than they are today, but also the math is still there. What would somebody reasonably pay pp/py to get about a decade of BW? If anything it starts becoming less abstract around TVM. For example when I think about the $4pp/py we paid for VGF - that’s a 40yr contract! Surely my cost is greater prepaying decades in advance. I think enough people will not overlook this aspect as 2042s’ end gets clearer. To me the bigger risk isn’t years left, it is what are the comparable options at that time.

 

[sethschroeder]

I don't know about all of the resorts but i was just looking to book a weekend at HH ( i do not own points for HH) and it would be a total of 132 points for two nights for a 2 bedroom. Cash price with tax is $839.00 per night. If I use Disney gift cards purchased from BJs at a discount cash price drops to $793.00. What I find amazing is that if you own HH the maintenance fees ($11.31pp for 2024) for this room for one night is $747.00. It is getting to the point where the maintenance fees will exceed the cash price for this resort. If and when that happens you are going to be holding on to a DVC timeshare that is worthless regardless of how many years are left on the contract.

Exactly why DVC should never build away from the parks again because in HH I have a ton of other options many of which have better locations on top of being in a hurricane impact area.

With WDW there is Swan/Dolphin but otherwise you are staying in a Disney hotel at cash prices that are going to surpass what DVC costs are unless WDW goes into the tank as a whole.

Disney is likely viewing themselves as a taking a loss at HH on the cash side because of the upkeep costs which have outpaced every other resort which is not a good thing when you consider an extra 1% in MFs per year builds upon itself.

 

[Bearval]

What happens if you just stop paying dues.. I've seen posts about foreclosures in the county record keeping.

Does Disney come after you for back dues? Or do they just give up and take the points back? Could you be proactive and just 'surrender' the contract.

(Sadly I should understand this being an owner...)

If you stop paying dues, DVC will not allow you to have access to the points and will start proceedings to get a judgement to take control of the contract. I don't believe Florida allows deficiency judgments so they couldn't come after you for past due fees owed but can take possession of the property.

 

[Nappy1380]

This a very interesting thread, which leads me to a potential show topic and deep dive. At what point is it going to be more beneficial to hold the contract to term and rent points out vs attempting to sell?

Depending on when you purchased and what you purchased for is going to play a part, however this is certainly something 2042 owners should start considering if the 2042 market is going to slowly continue the downward PPP trend.

 

[NY Pirate Princess]

I bought a small resale OKW contract this year and intend to hold until the end. It is enough points for an annual week in a studio or every other in a one bedroom which fits our needs perfectly. It will expire before we do, hopefully, but allows us to go on vacation through 2041 spending as much or as little time in the parks as we like.

I know dues are high and will go higher. However, the CBR room type we had in 2022 is one hundred dollars more a night for the same night in 2024. $400 for CBR about a mile from the skyliner? Nope.

Break even? Probably not. Investment? Certainly no. Happy? Absolutely.

Only time and dues increases will tell the story financially but in the meantime I will be making memories and having a blast. And I maxed out my 457 too!

 

[AnnaKristoff2013]

At what point is it going to be more beneficial to hold the contract to term and rent points out vs attempting to sell?

I think we're at that point with Vero Beach. If I owned VB I'd be dumping it before it's too late. HH is not far behind. VB dues are going to surpass rental rates for points pretty soon.

 

[HyperspaceMountainPilot]

I think we're at that point with Vero Beach. If I owned VB I'd be dumping it before it's too late. HH is not far behind. VB dues are going to surpass rental rates for points pretty soon.

I counter that both of those properties should still have a slightly positive value so long as their annual dues are less than the cost of renting points at the seven month mark. I’m not saying they will be great SAPs, but if renting points cost you 25/point in 2025, and their dues are less than 20/point, they are still worth a few bucks per remaining use year.