Was 2007 the bottom of the resale market?

We may have seen to bottom of resale prices in 2007. It was a great time to buy resale. While I expect that there will always be great bargains to be found, especially sifting throught the listings on eBay, prices seem to be on there way up and inventory is lower so far in 2008.

I'm talking about inventory that has real value, not the inventory that is worthless or nearly worthless. Worthless is unlikely to change.

I recently posted about increases in prices on RCI points resales for contracts with maintenance fees such that the cost is less than a 1 cent an annual RCI Point. In 2007, you could find deals at 2.7 cents a point and now they are selling for over 5 cents a point and rising.

I know other TUG members are very knowledgeable about WM, Bluegreen and other points or mini systems. Are you noticing the same increase in those points systems as with RCI Points?

I agree with you. I think the prices have gone up since Dec, 2007.

It happens every year. Timeshare resales are seasonal.

2008 Resales

I am of the opinion that quality timeshare prices on the resale market will somewhat stabilize for 2008.

Of course, there will always be some exceptional buys on Ebay.

BocaBum99 said:

It happens every year. Timeshare resales are seasonal.

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I know this has been discussed before, but what are the better times to sell? I assume end of the year isn't good as the supply is driven up by sellers looking for a quick sale to get out of next year's mf. Are spring and summer better times? Does it depend on whether it's a summer or winter resort? I assume you'll cast a wider net if you give the buyer the choice on whether current year's usage is included (for reimbursement of mf, of course!).

Glorian

My experience is that Spring is the best time to sell. That's always when I've sold the most number of timeshares.

This year, for some reason, January was unbelievable. It was 3 times better than my average for last year. February has been about average.

Seasonal Influence versus Bubble Burst?

I wish more statistics about the resale market were available to review to understand how much, if any, of a seasonal adjustment occurs within the market place.

Back on October 28, 2007 I started a thread wondering were the "End of Season Fire Sale" volume was because of only 1144 units being listed on eBay when the summer average had been 300-400 units higher. As late fall 2006 had marked the great decline in prices due to a flooded market.

Today, I see only 1058 units listed on eBay and sharply higher prices on a category of timeshares that I've watched closely.

Economics 101 teaches the law of supply and demand. This spring/summer should be give a clear indication on whether PCC's and the associated seller organizations are managing when to bring inventory to market better or if they simply have access to less inventory now than they did in 2006/2007. If it's the latter, I would expect even stronger price support in the market.

QUESTION: What were commodity items like WM credits and Bluegreen Points selling for in 2005? Then the "GOLDEN PERIOD" 2007?

2008 RESALE pricing just maybe returning to 2005 levels?

I can speak for Bluegreen since I specialize on them. In the last 12 months, prices for the equivalent product are about flat. In other words, Bluegreen used to allow all developer features to transfer prior to Feb 21, 2007. The price for such Bluegreen points was in the $.45-.55/point range on eBay.

Today, the prices are the same. But, you can only get them from an authorized reseller.

Prices for points that do NOT come with these developer benefits have dropped to between $.25-.35/point. That puts the value of the developer features at roughly $.20/point.

I believe a similar thing happened to WorldMark credits. WorldMark by Wyndham launched its feature depriving product in November of 2006. At that time, WorldMark credits were actually selling really well. They were bucking the trend of lowe prices due to PCCs. Since then, prices have steadily declined. My belief is it is directly related to the introduction of TravelShare.

There are definitely seasonal spikes in demand. Spring seems to be where people have the most interest for Bluegreen. There is a very high correlation between the numbe of tours a developer is taking to the resale demand. So, I believe as long as resort developers are selling retail, there will be strong demand.

On the supply side, the PCCs really had a huge impact at the end of 2006. I believe that could have been a one time phenomenon due to all the pent up supply that had no outlet for sale.

What I remain staunchly firm on is that as information diffiuses out into the market place over time that developer prices must converge. It is completely unsustainable for developer like Wyndham to sell a product that depreciates by 90% after its recission period. That means resale prices must firm and developer prices must weaken.

BocaBum99 said:

I can speak for Bluegreen since I specialize on them. In the last 12 months, prices for the equivalent product are about flat. In other words, Bluegreen used to allow all developer features to transfer prior to Feb 21, 2007. The price for such Bluegreen points was in the $.45-.55/point range on eBay.

Today, the prices are the same. But, you can only get them from an authorized reseller.

Prices for points that do NOT come with these developer benefits have dropped to between $.25-.35/point. That puts the value of the developer features at roughly $.20/point.

I believe a similar thing happened to WorldMark credits. WorldMark by Wyndham launched its feature depriving product in November of 2006. At that time, WorldMark credits were actually selling really well. They were bucking the trend of lowe prices due to PCCs. Since then, prices have steadily declined. My belief is it is directly related to the introduction of TravelShare.

There are definitely seasonal spikes in demand. Spring seems to be where people have the most interest for Bluegreen. There is a very high correlation between the numbe of tours a developer is taking to the resale demand. So, I believe as long as resort developers are selling retail, there will be strong demand.

On the supply side, the PCCs really had a huge impact at the end of 2006. I believe that could have been a one time phenomenon due to all the pent up supply that had no outlet for sale.

What I remain staunchly firm on is that as information diffiuses out into the market place over time that developer prices must converge. It is completely unsustainable for developer like Wyndham to sell a product that depreciates by 90% after its recission period. That means resale prices must firm and developer prices must weaken.

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Boca, thanks for the insights. Do you have comparable price points for 2005?

BocaBum99 said:

It happens every year. Timeshare resales are seasonal.

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I've been following the resale market since 1990. The market has been seasonal every year. Until 2007. In late 2006 they went down as always, but for the resorts I follow they didn't rebound in Spring/Summer 2007, as they always had before. I've not seen them go back up since, and I'm not sure they will. At least not the ones I watch. Which is quite a few (but not bluegreen)

It seems the Creiglist vacation rental inventory is getting huge and a person may be able to rent for about a MF instead of buying.

PA- said:

I've been following the resale market since 1990. The market has been seasonal every year. Until 2007. In late 2006 they went down as always, but for the resorts I follow they didn't rebound in Spring/Summer 2007, as they always had before. I've not seen them go back up since, and I'm not sure they will. At least not the ones I watch. Which is quite a few (but not bluegreen)

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I think the general rule is that the market trends downward. Once it hits a new low, it doesn't go up again. It seems that when the buying community sees it reach a new low, they don't want to bid over that amount.

The only way to change that behavior is for there to be a dramatic increase in demand or artificial price supports through ROFR. The increase in supply has been achieved through PCCs. There's nothing on the horizon I see that will dramatically increase demand. So, prices should continue to decline.

easysider said:

It seems the Creiglist vacation rental inventory is getting huge and a person may be able to rent for about a MF instead of buying.

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That's not exactly going to bolster prices. Almost every timeshare sold today is sold by a big chain, and they all already, or soon will, adopt methods to make resell timeshares less valuable. That's going to make huge losses for owners in the short term and huge profits for developers in the short term. However, over the medium to long term, I believe it will force a new business model.

eBay Timeshare listings

Right now only 956 eBay listings for timeshare auctions......supply and demand......

For those with a close eye on certain markets please indicate price changes you're seeing .....know and in the future.

I haven't noticed a fluctuation in price, just a significant lack of supply. I closely watch the midwest (specifically MN and WI), New Orleans, Mexico non-AI resorts, Hawaii, and coastal FL.

There is an economic downturn started or coming. Marginal TS users will not want to/ be able to pay MF's prices will go lower due to supply/demand.
I look around here in Fla @ houses and highrises--the builders don't know when to stop. New supply of TS's may kill the golden goose(again)!

How on earth do we get people to stop mindlessly repeating what they hear from newcasters and other bobbleheads about the supposed "economic downturn"? The roads are full of traffic even at $3.19/gallon, nearly every airplane I've been on the past several years was full, hotels are still being built all over the place, people are still buying electronic toys left and right, and they're still selling over 15,000,000 vehicles per year in North America.

Maybe some people become displaced as jobs move from one area to another, but the jobs are still there.

The fact that people aren't seeing double digit annual increases in the value of their homes doesn't indicate a recession.

Not yet. Just wait....

People use their double digit home inflation as "confidence" to spend and to refinance those homes to afford luxuries like TSs and cars. Now that prices have dropped significantly in the housing market, that stimulus to spend is not there anymore. I don't think we've seen the worst yet.

Soooo, it's the perfect time to buy now. As my dad always said: buy low and sell high.

K

Logically we are closer to a bottom than a top. In addition , we will not know what the bottom "was" until after the fact. If the price seems reasonable to you and your family, buy. If not wait.

Yep, a low was set...

Here’s my take on timeshare prices:

Developer:
An artificial market where every Friday has a price increase. I’ve been forecasting a “Timeshare Bubble” for a few years now – when will it burst? Who knows?

How long can they keep this up? Until the timeshare bubble bursts. Typically this will be a complete surprise to the entire timeshare market. Afterwards everyone will take credit for calling the high – wasn’t it obvious?


Resale timeshare market:
Calendar – sellers want to dump their timeshare just before they get the next year’s MF. They probably spend a few minutes and think eBay and may call some resellers and find out the bad news. I start getting MF notices in September; probably the start of panic sellers trying to unload a timeshare before the end of December.

Calendar - buyers think about wasting all that rent while on vacation. Skiers go skiing mid Dec to the end of April. While there they may see timeshare ads and maybe even take a sales tour. Family destinations like the beach or theme park go during the summer months so that’s when they start to thinking about a timeshare – probably take a sales tour. Renters lead their vacation by about 3 months so skiers look at labor day and family destinations in March.

Folks who buy resale are going to generally pay cash – no financing. Thus, the economy and the talking heads impact that buyer’s decision. From today until the November elections the candidates and talking heads might beat the hell out of the economy and cause folks to cut back superfluous purchases like a timeshare. Warren Buffett, just today, informed us that we are in a recession - wow. (If you believe a guy who may be cash rich and want to see the market plummet so he can buy stocks cheap)

The resale buyer must answer the question “Do I really need to pay all this money for one week’s vacation and the never ending MFs that will be with our family until we dump this unit?”


Personally, I think 2007 was a low for resale timeshare prices; but so was 2006 and 2005 and 2004 ... The WHOLE timeshare market is phoney to begin with. It's up up and away...until that bubble eventually bursts.

2007-2008 bottom and 2009 rise

Economy:

2008 will be a challenging year for some households and a discretionary item like timeshare will be eliminated by a few. However, many households with a timeshare are probably paying more in monthly car payments than for one year of maint fees. Although pinched, many households that paid $10,000 for a timeshare will not sell in distress because of a $600 annual maint fee.

Resolution of the election cycle will calm the agitated.

Developer:

Developers do have a indirect vested interest in a healthy resale market. If the resale market were to diminish it would be the end of wholesale as well. If the resale market diminished some HOA's would be hurt as Maint Fees would increase significantly.

Not that Developers would try to save the resale market with ROFR. They know they must simply continue to make it a viable vacation value relative to hotels. At the same time they will try to differetiate their new product from resale using all the normal marketing techniques.

Resale:

Buyers and Sellers will continue to follow annual calendar cycles based upon their motivations and needs.

"Do I really need to pay all this money for one week's vacation". Well, yes if it gives me a ROI in a couple years. It's pretty easy to work the numbers and figure out that you can purchase a timeshare for few thousand and get timeshare vacations for $600/wk vs $1,200/wk by renting. It won't take long to come out ahead.

Resale mills have found their place and learned to manage inventory. E-bay volumes appear to be pretty stable or slightly declining in the resorts I track.

Resale purchasers are becoming more astute and less willing to purchase minimal value units.

HOAs

Some minimal value units ( way bad season ) will be turned into HOAs repeatedly and this will be the test of the industry. While perpetually trying to give away such weeks, the HOA may reach a point where the week is simply rented out. Then the maint fees would be spread over all other owners. Even this is not dire, as most resorts have a broad and robust peak season that will absorb the slight increase to keep functioning.

Demographics

Retiree bulge
Off shore purchasers with strong currrency

Watch out.


I don't think a bubble is that likely because so many are getting a good vacation value.


Respectfully