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Is Pricing at Bottom - Will 2010 Show Upward Pricing?

london

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Many quality timeshares have hit selling lows in 2009. Rock bottom pricing.

Do you think a slight upturn and upward movement in pricing will take place in 2010?

How will Marriott, Starwood, Hyatt, and Hilton do?

I am talking about the resale market. Thanks for your input.
 

Patri

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No idea, but unemployment numbers are back up. So on a day to day basis, life is still a struggle and t/s will not be important to many people. More who have been holding off may need to unload them, and others won't have the money to buy them.
 

tombo

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I don't see the resale prices rising resale for a long time, in fact I think they haven't reached the bottom yet. When the economy finally gets better people who have been suffering will be worried about replenishing savings accounts and paying off bills long before they worry about purchasing non essential items like timeshares. To most people timeshares (and vacations) are a luxury that come with prosperous times. It will probably be several years before the feeling of prosperity returns to a level where most can look forward to the future and splurge big money on high dollar luxury items like a timeshare. Couple that with the fact that the longer the prices stay deflated the less perceived value a timeshare has, and they may never recover at all.
 

london

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Points Well Taken

I don't see the resale prices rising resale for a long time, in fact I think they haven't reached the bottom yet. When the economy finally gets better people who have been suffering will be worried about replenishing savings accounts and paying off bills long before they worry about purchasing non essential items like timeshares. To most people timeshares (and vacations) are a luxury that come with prosperous times. It will probably be several years before the feeling of prosperity returns to a level where most can look forward to the future and splurge big money on high dollar luxury items like a timeshare. Couple that with the fact that the longer the prices stay deflated the less perceived value a timeshare has, and they may never recover at all.

Your points are well taken. Thanks for your input.
 

gmarine

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I don't see the resale prices rising resale for a long time, in fact I think they haven't reached the bottom yet. When the economy finally gets better people who have been suffering will be worried about replenishing savings accounts and paying off bills long before they worry about purchasing non essential items like timeshares. To most people timeshares (and vacations) are a luxury that come with prosperous times. It will probably be several years before the feeling of prosperity returns to a level where most can look forward to the future and splurge big money on high dollar luxury items like a timeshare. Couple that with the fact that the longer the prices stay deflated the less perceived value a timeshare has, and they may never recover at all.

I agree. I think another part of the problem is the large increases in maintenance fees. As fees rise, the value of a timeshare generally goes down. I think many resorts are still going to see decreases in selling prices and defaults are going to continue to rise.
 

DVB42

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I agree with all comments to this point. I do not expect a rebound in timeshare price any time soon and especially not in 2010. The resorts mentioned in the original post (Marriott, Starwood, Hyatt, and Hilton) will likely continue the downward trend in my opinion. As we all know, many very nice timeshares have no resale value now and the Marriotts, Hyatts, etc. could easily drop significantly during 2010. I do not see them bucking the downward trend of the rest of the timeshare market.
 

JMAESD84

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I agree with all comments to this point. I do not expect a rebound in timeshare price any time soon and especially not in 2010. The resorts mentioned in the original post (Marriott, Starwood, Hyatt, and Hilton) will likely continue the downward trend in my opinion. As we all know, many very nice timeshares have no resale value now and the Marriotts, Hyatts, etc. could easily drop significantly during 2010. I do not see them bucking the downward trend of the rest of the timeshare market.

The brand timeshares had the largest devaluation of prices in 2009 (in terms of pure $$) and I expect this trend to continue for 2010.

We could be witnessing the collapse of an industry who's time has passed. IMO - There are a lot of factors working against any type of price recovery.
 

bilfbr245

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Pessimism peaks at market bottoms. Noting the pessimism expressed in this thread, as well as other places, I wonder whether some degree of rebound may be at hand. Usually, just when you feel in your gut that things could not possibly get any better, they begin to do so.
 

yumdrey

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How will Marriott, Starwood, Hyatt, and Hilton do?

I am talking about the resale market. Thanks for your input.
Some starwood TS (vistana resort, SBP, etc...) have almost no value already.
Harborside, St.John, WKORV & north, WPORV already had huge price drop too.
There are bunch of starwood TS on ebay always.
OTOH, there are not many resales (ebay) for Hyatt, Hilton or Marriott. Compared to 2008 and 2009, current reduced supply is still holding some value for these brand name timeshares. Surely their prices have dropped like all other timeshares, but they are still sold for thousands of dollars on ebay.
I don't think there will be "huge" price drop like 2008 and early 2009 did, but the prices will drop slowly and steady on 2010. I think most owners who were in panic dumped their timeshares on late 2008 and 2009. Most owners who still keep their ts so far can afford their MFs unless there are huge increase.
 

Bill4728

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Just one example of the huge price drop on "Hotel brand TS." For years the Marriott Newport Coast TS in SoCal (all 2 bd units, with one view category) was pretty rock solid in it's pricing. About $13K for gold season (winter & spring) and about $19K for Platinum ( summer & Fall) NOW It not hard to find a gold season for ~$7,000. Therefore, the prices on both these have dropped about $5,000 -$6,000.

IMHO, it seems that the prices have dropped about $5,000 or 50% ( whichever is greater) on almost all TS. The ones that were $2000- $3000 2 years ago have dropped to nearly zero.
 

Mel

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While I don't think prices will rebound in 2010, I think we may be close to the bottom, and might see a modest increase within the next few years.

The biggest problem is not the value of the timeshares - the value has always been there. When compared apples to apples (with vacation homes) rather than oranges (hotels), shared ownership still makes sense.

What I hope will happen over the next decade will be a shift in ownership, from those who really shouldn't own timeshare, to those for whom it makes sense. Some of the developers are marketing their timeshares to the appropriate audience - requiring significant income before inviting people on tours - but not all are. Even then, income doesn't tell the whole story.

Timeshares should be owner by people who would otherwise enjoy a vacation home, and who would not be happy in a hotel room every year. It is not really a way to save money, but to improve what you get for your money.

I have neighbors who vacation every year in a hotel, and eat out every meal. I have other neighbors who go to an all-inclusive resort every year, leaving the kids with relatives when they do. I have others who don't vacation, because they struggle to make house payments. None of them would be happy with a timeshare, because it doesn't fit their personal needs. These same people also wouldn't be happy renting a house on the beach.

On the other hand, over the years I have met many happy timeshare owners - from one of the librarians in the small town we used to live in, to one of my DD's teachers, and other local families. In every case, timeshare has allowed us to vacation in a way we couldn't otherwise afford. Children who have visited not just other states, but other countries, and experienced different cultures. Families who vacation together.

In my experience, the families that have been happy are also the ones who budget ahead for vacations, rather than figuring out how to pay for them after the fact. They are the families who visit the public library when a new book or DVD comes out, being willing to wait a few days rather than purchasing or renting the day it comes out. When we buy a DVD it's one we know we'll watch over and over.

The owners who are selling now at the rock-bottom prices are the ones who cannot afford their timshares, not because they don't have the income to support them, but because the types of vacations we enjoy with our timeshares do not hold a priority position in their lifestyles. They have other priorities, whether it is a monthly trip to the salon to have a manicure, $200 a month cell-phone plans, or cable TV. There will always be those kinds of sellers, and many will end up settling for extremely low resale prices, because they have bought into the idea that their timeshare is worthless. They tried to sell at a ridiculously high price, they paid someone else to try to sell it at that price, and have given up. Then they've seen someone else selling for $1, and decided they would rather take $1 than wait until a reasonable offer comes along.

While the "brand name" timeshares are selling at higher resale prices than many independant resorts, they are not really worth that much more. The annual fees at those resorts are often higher than the smaller resorts, and in many cases, the smaller resorts trade just as well as the luxury resorts. I expect prices at those smaller resorts to rebound faster than the big names, mainly because there aren't as many on the market, plus the lower fees do make them more "affordable."

When you get to the luxury level, timeshare might not make as much sense - particularly for those who don't need that extra bedroom, or the kitchen facilities. But for upper middle class families, traveling with children, they still make great sense. I personally won't go back to sharing a room with my kids, having to turn the lights out when they go to bed, and having to eat out every meal - the kids would enjoy that part, but it becomes a huge part of the vacation budget.
 

BocaBum99

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The only way I see resale prices increasing in the next couple of years is if the developer starts buying back timeshares in the form of buy backs or ROFR exercise. So, it will coincide with how well resort developers are doing and their level of inventory. Right now, resort developers have written down or are writing down inventory values. They will eventually run out of that inventory. When that happens, they will make build vs. buy decisions to replenish inventory. At that point, resale prices for those resorts will increase.
 

gravityrules

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Don't ignore demographics

The peak earning period for the Boomer generation has crested. This suggests TS valuations have also peaked. Note that the demographic trend would have predicted lower TS valuations independent of what's happened in the economy.
Even with an improving economy TS valuations are unlikely to return to previous levels.
 

DanM

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When people have money to burn again.

The market will come back when people feel irrational exuberance again, probably not before late 2011 or after even if the economy clearly turns before that.

Face it. If you are on vacation paying $1500 - $3000 for a suite and someone says buy this forever for only $20,000 and $1200 a year maintenance you have to be completely irrational to buy. Compared to a $3000 a week rental the simple payback (no mortgage, no inflation) is over 11 years...longer than most people own a primary residence. Compared to a $1500 weekly rental the payback takes 66 years if my math is correct. 20000 down divided by 300 difference between 1200 maintenance and 1500 rent.

The strange thing is that people will be irrational. Especially if they listen to salesmen (another mystery).
 

BocaBum99

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The peak earning period for the Boomer generation has crested. This suggests TS valuations have also peaked. Note that the demographic trend would have predicted lower TS valuations independent of what's happened in the economy.
Even with an improving economy TS valuations are unlikely to return to previous levels.

I don't think the timeshare resale market and the peak earning years of the Baby Boomer generation are highly correlated.

You are assuming that the resale timeshare market works like any other market. It doesn't.
 

BocaBum99

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The market will come back when people feel irrational exuberance again, probably not before late 2011 or after even if the economy clearly turns before that.

Face it. If you are on vacation paying $1500 - $3000 for a suite and someone says buy this forever for only $20,000 and $1200 a year maintenance you have to be completely irrational to buy. Compared to a $3000 a week rental the simple payback (no mortgage, no inflation) is over 11 years...longer than most people own a primary residence. Compared to a $1500 weekly rental the payback takes 66 years if my math is correct. 20000 down divided by 300 difference between 1200 maintenance and 1500 rent.

The strange thing is that people will be irrational. Especially if they listen to salesmen (another mystery).

I think this is true if and only if what you call irrational exuberance means easy credit. Timeshare sales for developers are NOT limited by the state of the economy. It is completely dependent on the availability of financing for timeshare purchases. If available credit for timeshare purchases doubled, then Resort Developer sales would also double. It is a credit limited business, not a sales limited business.

Irrational exuberance did lead to very loose credit. So, it could be true that they are related.

Remember, the timeshare industry has been selling the same way for around 45 years. People have been making irrational decisions on vacation for all those years. The only thing that changed in the last 5 years is that the sales rate went on steroids. Asset bubbles lead to hyper expansion of the market. Had there not been a real estate asset bubble, timeshare sales would have been fine and probably not have experienced the huge spike up and subsequent drop off.
 
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ondeadlin

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Your operational rule of thumb with timeshares should be that once they fall in value, they never rise. Are there exceptions? Um ... well ... I'm sure there are somewhere, but they're few and far between. Could there be more in the future? Maybe, but your just guessing.

If you were to track any random resort from the day the developer closed up shop, over the next 20 years I'd bet you the trend line is steadily downward. The only question is how quickly. The trend has been magnified by the Great Recession, but that doesn't mean there's going to be a bounce back.

I saw a 2,000 point Hyatt contract go for $9k and change on eBay yesterday. A year ago that would have been stunning, and probably wouldn't have made it through Hyatt's ROFL.

Now? Nothing's stunning, and I'd be surprised if it doesn't make it through. Heck, I'd be surprised if one doesn't go lower as the trend line continues.
 
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yumdrey

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I have seen westin mission hills were sold for $1 on ebay about 2 months ago, and now they are sold around $650 - $800 on ebay. It's a little rise.
 

James1975NY

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I am guessing that there will be very few exceptions where timeshares will increase in price on the secondary market. First, resorts that have ROFR need to start buying them back (perhaps someday).......then, demand over supply (not likely). With resales, Buyers talk about the prices that they are able to "score"....that really sets a benchmark and others are not as willing to pay much more than the next.

Unfortunately, for many folks that are selling, they often respond to marketable offers with "I paid $25k for my week and I am not taking less than $X,XXX.00. Not only do they lose on the opportunity to sell for some cash, they keep the responsibility of the yearly maintenance and taxes. Emotional decisions.
 
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DVB42

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Just one example of the huge price drop on "Hotel brand TS." For years the Marriott Newport Coast TS in SoCal (all 2 bd units, with one view category) was pretty rock solid in it's pricing. About $13K for gold season (winter & spring) and about $19K for Platinum ( summer & Fall) NOW It not hard to find a gold season for ~$7,000. Therefore, the prices on both these have dropped about $5,000 -$6,000.

IMHO, it seems that the prices have dropped about $5,000 or 50% ( whichever is greater) on almost all TS. The ones that were $2000- $3000 2 years ago have dropped to nearly zero.


These numbers represent significant price drops in essentally all timeshare brands. However, the Disney Vacation Club seems to be the exception. There has been a much more modest drop in their price. Do you think DVC are ready to tumble as well or are they likely to retain value during the downturn?
 

Garnet

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Pent up demand will help rising prices

For those that have not taken a vacation in the last 2 years, there will be pent up demand. This will lead (more likely in 2011) to an increase in pricing. May be noticed first in rentals. The resales. That dream of forever vacations after no vacation for sometime will be mighty alluring. Developer or those that search and find Tug. Jobs need to be stable for at least 6-9 months first for it to happen.
 

Patri

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I don't think the baby boomers and older generation will ever again feel totally secure, even when the economy is robust, that something coudn't happen again to wipe out retirement accounts and other savings. We will take measures to keep what we gain back now, and not spend beyond what could be paid off immediately if the situation warranted.
Even younger people who saw their parents lose jobs, or the college age who couldn't find decent employment after graduation, may have more tempered outlooks on finances. Truly, I hope no one dives off the cliff and goes into debt for a 'new' timeshare. If the industry as a whole changes, so be it.
 

timeos2

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DVC is not immune

These numbers represent significant price drops in essentally all timeshare brands. However, the Disney Vacation Club seems to be the exception. There has been a much more modest drop in their price. Do you think DVC are ready to tumble as well or are they likely to retain value during the downturn?

DVC has also shown a significant softening in resale price, but not as great as some of the other "names". But they may be heading toward the same drastic reduction in perceived resale pricing. (Remember - because of ROFR the pricing that owners actually get may not be known as DVC doesn't report that and they only pay the low price of the original offer NOT the so called "ROFR" minimum some try to establish as the price point where ROFR won't be used. Now that the market for timeshare backed debt has dried up even DVC may have no money to use for ROFR purchases according to recent reports.)

Plus remember that unlike most deeded timeshares because DVC is Right To Use, basically a lease that obligates you to paying the fees, they are guaranteed to have a drop to zero value. And the resale price of the remaining years of the contract is also bound to drop. That has also started and will accelerate as the remaining years dwindle.

So the answer is no, DVC will not maintain value during the downturn and in fact are one of the few that are guaranteed to lose value even if the downturn (and for timeshares it is far more than that and may never turn around to anything near the heyday) ends. In the recent short term they did well but all signs point to a significant drop in the relatively near future for DVC values.
 

BocaBum99

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I don't think the baby boomers and older generation will ever again feel totally secure, even when the economy is robust, that something coudn't happen again to wipe out retirement accounts and other savings. We will take measures to keep what we gain back now, and not spend beyond what could be paid off immediately if the situation warranted.
Even younger people who saw their parents lose jobs, or the college age who couldn't find decent employment after graduation, may have more tempered outlooks on finances. Truly, I hope no one dives off the cliff and goes into debt for a 'new' timeshare. If the industry as a whole changes, so be it.

It's interesting that you mention this bubble memory theory. I thought the same thing after the 2000 stock market crash and yet, just 8 years later, it happened again.

I think people's memories are short and they fall into the same traps over and over again when presented with similar circumstances.
 

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DVC has also shown a significant softening in resale price, but not as great as some of the other "names". But they may be heading toward the same drastic reduction in perceived resale pricing. (Remember - because of ROFR the pricing that owners actually get may not be known as DVC doesn't report that and they only pay the low price of the original offer NOT the so called "ROFR" minimum some try to establish as the price point where ROFR won't be used. Now that the market for timeshare backed debt has dried up even DVC may have no money to use for ROFR purchases according to recent reports.)

Plus remember that unlike most deeded timeshares because DVC is Right To Use, basically a lease that obligates you to paying the fees, they are guaranteed to have a drop to zero value. And the resale price of the remaining years of the contract is also bound to drop. That has also started and will accelerate as the remaining years dwindle.

So the answer is no, DVC will not maintain value during the downturn and in fact are one of the few that are guaranteed to lose value even if the downturn (and for timeshares it is far more than that and may never turn around to anything near the heyday) ends. In the recent short term they did well but all signs point to a significant drop in the relatively near future for DVC values.

If we see a serious drop in the price of a DVC TS in the next year(Maybe $40/unit for OKW) I think it will be time to buy. We do love Disney, but unlike most Disney fans I am not blind to the fact they are only interested in draining every dollar their customers have.

Joe
 
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