Why have DVC Resale Prices Increased?

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Over the past few years DVC resale prices have generally increased and the chart below shows the increases from Sep. ’14 to Sep. ’15.  Some people are surprised that resale prices would increase at all especially for the older resorts as DVC contracts have an expiration.  However, despite the fewer years the prices for DVC resale contracts have continued to increase.  Part of the reason for this is that DVC points are a substitution for paying for Disney deluxe hotel rooms.  Basically, the inflation of the room rates thus far have seemed to offset the fewer years.

There are a few other reasons why DVC resale prices may have increased over the past few years and they are listed below:

  1. Disney raising the price of what they will buy back contracts at.  For example, recently Disney has bought back many Boardwalk contracts some as high as $90/pt.  Moreover, the average listing price for a Boardwalk contract was only $81/pt. in Sep. ’14.  Now, a potential buy back price for a Boardwalk contract is over 11% higher than an average listing price just one year ago.  This is certainly a big part of the reason the average Boardwalk listing is now over $100/pt.  For more information about recent Disney buy back prices please visit our blog, Disney Vacation Club Raising the ROFR Bar?
  2. Coming out of a recession certainly causes an impact.  Technically, the Great Recession ended in 2009, however, the effects seem to be felt a few years beyond that.  In 2012, a Boardwalk resale contract could be bought in the mid 60’s per point, and through Disney directly a new contract could be purchased for a net price of $105/pt. via the 20th Anniversary promotion DVC offered at that time.  Now, further removed from the Great Recession, Disney is able to sell new resorts as high as $165/pt. while an average Boardwalk resale contract will sell for as high as $100/pt.  Both examples represent an over 50% price increase from 2012 to 2015.
  3. Inventory has significant affects on DVC resale pricing.  Economics will tell you that an increase in supply causes prices to drop and a decrease in supply causes prices to rise.   In September 2014, there were over 500 DVC resale listings on the market according to the website dvcdisneyresale.com and in Sep. ’15 there are just over 300.  A nearly 40% drop in inventory can certainly have an affect on prices.  Some feel the drop in inventory may be correlated to Disney’s sellout of the Grand Floridian.  After Disney’s sell out of the Grand Floridian it seemed many potential buyers were opting for resale contracts as they didn’t desire home resort priority at Aulani and wanted their home resort to have one and two bedroom villa options that the DVC Polynesian does not offer.
  4. It is Disney! When you are buying a DVC resale contact you are buying into Disney Vacation Club and into the Disney family of products. The Disney brand and product continues to grow stronger every year.  For an example of this continued growth look no further than the Disney stock price, which has experienced a 6 fold increase in 6 years from 2009 to 2015.

 

Resort Avg. Cost Per Point:  Sep. ’14 Avg. Cost Per Point:  Sep. ’15 1 Year Change Per Point Percentage Increase
Saratoga Springs $78 $86 +8  10.3%
Bay Lake Tower $104 $123 +19  18.3%
Grand Californian $134 $152 +18 13.4% 
Animal Kingdom $81 $86 +5 6.2% 
Old Key West $71 $81 +10 14.1% 
Grand Floridian $135 $149 +14 10.4% 
Hilton Head $61 $64 +3 4.9% 
Aulani $98 $111 +13 13.3% 
Wilderness Lodge $79 $89 +10 12.7% 
Boardwalk $81 $101 +20 24.7% 
Beach Club $95 $106 +11 11.6% 
Vero Beach $48 $53 +5 10.4% 
* Average cost per point based on average asking price across resale market from Sep. ’14 and Sep. ’15 according to disneydvcresale.com

Comments

  • Eric Topp
    September 8, 2015

    Nick,

    A couple of questions:

    1) Is this the new norm as to per point rates or a bubble?
    2) It appears that the per point rates move in large swings vs. gradual increases. It would be interesting to see the swings and if they have historically swung the other way as well (i.e. down).

    • Nick Cotton
      September 8, 2015

      Eric,

      Great questions. To say the resale prices are in a bubble would also suggest the direct Disney prices are in a bubble as well given the price difference is still strong (i.e., Bay Lake resale at $123/pt. vs. Bay Lake direct at $170/pt. or Boardwalk resale at $101/pt. vs. Boardwalk direct at $155/pt.). And I don’t believe DVC as a whole is experiencing a bubble. The demand for Disney continues to rise and consequently the ticket costs and room costs continue to increase with it. DVC will also be compared against the costs of the alternative, which is paying cash for the Disney hotel rooms. And currently, a resale contract holds up incredibly well when compared to paying cash for Disney hotel rooms. That being said with anything there is a limitation of how much something can go up, but I don’t see any huge drop coming in the market naturally. In regards to the large swings up those can often be attributed to Disney’s buyback. If Disney decides to significantly increase the buyback for a Boardwalk contract from $80/pt. to $90/pt. like they recently did then the market will adjust quickly. To have a quick swing down would likely only be caused by a policy change by Disney or strong economic factors affecting the price of many things (i.e., recession).

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