How low will resales go?

It's been a while since I last checked in...life's getting in the way.

I was and currently still in position to pick up another TS (leaning towards a second week at WKORV). I held off primarily because I didn't have the time to do the research but also because of the greater market downturn. My crystal ball is cloudy. Anyone have any insight?

Thanks.

I would track prices on the major websites every day and aim towards fall - historically there is usually some "dumping" before MF's are due in Jan. and with the economy the way it is, there may be some real bargains in the fall.

My crystal ball says resale prices will continue to go down and then level off. I predict that WKORV prices (2 bdrm LO) will eventually settle at: OF 30-40k, OV 20k-30k, IV 15-20k.

If Starwood scraps the 3rd phase and/or Maui Zoning restricts further development, then the prices might rise slightly.

Of course, I predicted that oil would never go above 70, so what do I know?

I really can't see OF-Deluxe at WKORV going down that low. They have been in the $50 range for a long time. I know of one unit that went unsold on ebay at $45k so i'm sure there are swings here and there but they seem to have stabilized in the $50k range for now. FredM from TimeshareResaleGallery already indicated on these forums that if anything, at the moment, prices are creeping up on those units due to scarcity of inventory and owner dissatisfaction with the OF units at North.

I also think those units are much easier to rent at a market premium which makes them more valuable for resale purposes.

Thanks.

I ask because I'm not a economist nor a Wall Street guy. If the housing market is an indication of the economy, I think we've hit bottom and currently at a flatline with a tiny movement towards the upswing.

R Chen said:

Thanks.

I ask because I'm not a economist nor a Wall Street guy. If the housing market is an indication of the economy, I think we've hit bottom and currently at a flatline with a tiny movement towards the upswing.

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You have high hopes. Every day you hear more bad news. Nobody knows how much stuff is still not reported. The stock market is a give and take and is going nowhere right now. You are in a recession. I think it will be a long and hard one. We did not hit bottom. Housing fell another 7 percent. People are dumping the big gas cars. The dealers can not sell them . Just think, car with a 20 gallon gas tank. Gas at say 4 dollars. That is 100.00 for a fill up. You will see more layoffs sorry to say. The best thing is to stay out of debt if you can. Wait tell the 2009 MF's are do. I wonder how many will be late or not paid. Where we live, on the news and in the paper they show how bad it has hit our local area. There are foreclosed real estate figures that are off the wall. High. Our local paper each week has a list now. Before you may see one once in a while. Sorry for the bad news I feel will still see this happen.

I agree. Those OF $50,000 Maui timeshares are going to come down more. People can't afford to have all that cash tied up in a luxury anymore. And with the airline problems of late, it's become quite a nightmare to get there.

I would bet the OF units will be in the low $40k range before year's end. I almost bought one and I kept hearing over and over again how the seller could not afford to keep the money "invested" in a luxury vacation anymore. Very sad. I don't see an end is site either. Hopefully next year will be more healthy for the economy.

K

Just remember - most predictions of doom never come true.

That doesn't mean I'm for getting into ANY debt right now - but determine what it's worth to you and that you can afford it. Then act. Very few people are successful at picking tops or bottoms.

Then again, there may come a time when those of us who feel they have enough timeshares in their life will come across a price they can't resist!

Maybe in the Bay Area, but not in Southern California -- homes are still edging downward and inventory increasing -- that with gasoline prices skyrocketing equals less money in the pocket IMHO

bobcat said:

You have high hopes. Every day you hear more bad news. Nobody knows how much stuff is still not reported. The stock market is a give and take and is going nowhere right now. You are in a recession. I think it will be a long and hard one. We did not hit bottom. Housing fell another 7 percent. People are dumping the big gas cars. The dealers can not sell them . Just think, car with a 20 gallon gas tank. Gas at say 4 dollars. That is 100.00 for a fill up. You will see more layoffs sorry to say. The best thing is to stay out of debt if you can. Wait tell the 2009 MF's are do. I wonder how many will be late or not paid. Where we live, on the news and in the paper they show how bad it has hit our local area. There are foreclosed real estate figures that are off the wall. High. Our local paper each week has a list now. Before you may see one once in a while. Sorry for the bad news I feel will still see this happen.

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Don't know where you're at Bobcat, but gas is now 3.95 here in NW Ohio. Housing market is not that great, headline in The Toledo Blade this morning prices down 13.8% from 1Q 2007. I see it watching the Detroit Red Wing playoff games, empty seats! I remember when you couldn't get seats and people were flying to the opponent's city to watch the games(easier to pick up tickets).

Was watching CNBC yesterday, and they were talking about high-end HI real estate. Local HI agent said the banks are treating people with mult-millions in assets, as first time buyers. Banks are being very cautious. Had a neighbor who thought he had his house sold last summer, buyer couldn't get financed. Just sold it last month.

Since we are all speculating ... here is my take ...

Expect resale prices to continually decline over time -- the rate of decline is the only variable. These TS units are commodities. In a larger development like WKORV, there were literally 10's of thousands of identical interests sold. The units only get older and less desirable over time (again, question is rate at which this happens and how well Westin keeps the place up).

So it seems inevitable that the prices will always be in some state of decline. As a buyer, I would not focus on the trend. I would calculate the price at which the purchase will meet my objectives (whatever they might be) and then jump when I can get my price. It's like buying a new TV or PC -- they will always be cheaper later in time, but you do get to enjoy them as soon as you purchase.

Has anyone noticed FOOD prices recently. I just paid $225 for my usual weekly shopping that used to cost me $150.

Now this to me is a bad sign....

K

I don't think housing prices have bottomed out yet. We have a small sub contracting company. Steel prices are skyrocketing every week. Huge consturction projects have been cancelled because of the soaring steel prices alone. All of that has not trickled down yet.

SDKath said:

Has anyone noticed FOOD prices recently. I just paid $225 for my usual weekly shopping that used to cost me $150.

Now this to me is a bad sign....

K

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Yeah, especially dairy products. Milk prices have been going up here for the last year or so. DH wondered the other week why I bought 2 cartons of Tropicana OJ. Because it was 2/$5 , regular price now $3.19

I have to laugh at the "suits" on CNBC talk about no inflation. Obviously a bunch of men who don't go to the grocery store.

Not to turn this into a political issue (a TUG No-No), but for years and years we have been told (by the Gov't) that inflation is "in-check" on a quarterly basis - we all know this is untrue, and has been for years..

What is the famous Mark Twain quote (among many)?
"There are lies, damned lies and statistics."
or
"Facts are stubborn, but statistics are more pliable."
or
"Get your facts first, then you can distort them as you please."

To further detour from the topic: I've been told by a very experienced meat trader to buy meat now because farmers are choosing to slaughter their livestock early because of the cost of feeding them.

I've been picking up steak and chicken breasts as they go on sale.

SDKath said:

Has anyone noticed FOOD prices recently. I just paid $225 for my usual weekly shopping that used to cost me $150.

Now this to me is a bad sign....

K

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Ok 2 things:

1. Go to Costco
2. You saved a bundle on your road to 5*

and 3 Imagine picking up 4 WKOR-N for 15,000 each (60K) spliting them and spending an entire 2 months in Maui.......

The price of TSs only matters if your selling or buying...if your a user than it really doesn't matter does it...

It's like the guy in Vegas takes $1000 and wins $50,000 on Craps and than plays blackjack and loses $49,000 and goes home. Wife asks how did you do...He says broke even....

I can't imagine WKORV OF 2 bdrm dipping below mid 40k's because either I or someone here will pick up before it goes lower. I'm keeping my fingers crossed becuase I would LOVE to pick one up at that price.

I see the glass half full. I'm not living in a vacuum and failing to realize that gas prices are going up, layoffs are occuring, etc. My profession gives me insight into the housing market which leads me to believe the market has flatlined. I think media reports about the market/economy are usually several months late.

the interesting question (and I have not run math because I'm too lazy) is when will the price of a resale unit at WKORV unit fall to a place where it becomes an attractive investment if you want to try and manage the unit as a rental.

Seems like people can consistently get high $3 - $4.2K for two bedroom rentals at WKORV, depending on the week. My sense is that the rental rate might be creeping up slightly.... could be wrong there. But net of maintenance fees, at what resale price do those rental rates provide an attractive rate of return for the TS owner who is in it to rent?

rocky said:

But net of maintenance fees, at what resale price do those rental rates provide an attractive rate of return for the TS owner who is in it to rent?

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Interesting point. I'm at WKORV this week and I've met several people who are here via Expedia or other agency. Their effective price (for a studio) is ~$200 per night. This is about what SVN is offering WKORV to SVN members, so the rate is not a surprise. However, at least for the short-term, I wonder if anyone can consider WKORV as an investment in hopes of renting each year. Of course, some have better luck than others.

Because people net $3-4k in rent does not mean that that price can be sustained in the long term. The biggest factors for determining the rental price are out of our hands.

Rising airfares is a huge one. I have x dollars to spend on my annual vacation. If I end up allocating $4k to flying my family of 4 (as oppposed to $2k in years' past), then that is less money I have to spend on lodging. While you can get to Phoenix, Colorado, or California by air, car, bus or train, we only have one option with Hawaii. If fuel prices remain high, the rental prices will drop.

The second factor is development. The very low price that one can pay for really nice lodging in Orlando is indicative of how over developed Orlando is. Maui is in a position to be the next Orlando if they keep allowing more and more hotels and timeshares to be built. With only one 2-lane highway traversing most of the island, gridlock is not far away. With the -n property completed and the third phase in development, that will certainly result in the rental market softening for our Westin villas, especially if you own an island view, because Starwood will give these away for beans before they'll allow them to sit empty because it's pure profit for them.

LisaRex said:

Because people net $3-4k in rent does not mean that that price can be sustained in the long term. The biggest factors for determining the rental price are out of our hands.

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Agree, but not to the extent you go to. I don't think you can compare Orlando's property glut to Maui's beachfront resorts. I don't think you will see beachfront lodging costs fall to the floor. I have yet to visit somewhere on vacation where I see prices getting materially cheaper. And I see a lot of families giving up the European vacation to go to Hawaii and Mexico. People are still taking vacation, just going closer in. Airfares are what they are... not everyone will stay home.

For example, I own a property in PV that I rent year round. I was SURE with the additional development on the bay and the recession that I would have a slower pickup rental wise...... but I raised my prices slightly and decided to see what happened. I'm having a record year. And airfare prices have roughly doubled for certain time periods for visiting Mexico. I'm learning that despite what the media says, not everyone suffers and people still go on vacation.

Fuel prices are not the main reason for the very high HI airfares - it is mainly due to competition (or the lack of...) - flights of longer distances are cheaper than flights to HI.

DavidnRobin said:

Fuel prices are not the main reason for the very high HI airfares - it is mainly due to competition (or the lack of...) - flights of longer distances are cheaper than flights to HI.

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Intraisland flights have no competition now that Hawaiian is the only game in town. However, several airlines service the mainland to Hawaii, including America, Delta, United, Hawaiian, Northwest, Continental and US Air.

Certainly - but fuel prices affect all flight costs on a per mile basis - yet - you can get cheap flights (relatively) to many places of much further distances for ~1/2 of the cost to fly to HI.

e.g. SF to New York, and SF to HI is about the same distance (actually I think NY is a bit further) - yet, check out the good prices of SFO to NY... much less expensive (<1/2). why? I would suggest competition.

heck - a flight to STT from SFO (~10 hrs of flight time) is cheaper than SFO to HI...