TravelTime
TUG Member
- Joined
- Mar 20, 2018
- Messages
- 8,093
- Reaction score
- 6,460
- Points
- 499
- Location
- California
- Resorts Owned
- All Resale: MVC DPs, Marriott Ko Olina, Marriott Marbella, WKOVR-N, Four Seasons Aviara
For most of the time one can count on discounts inc Easter at 15-20%. Premier times with DVC tend to be some of the worst $$$ values comparatively speaking. The rental price, which can be better than owning since there are no home resort restrictions if you can find an owner, would be in the range of $7500 for 466 points and no tax. Even if you go yearly and assume you'd use that money for the trip, the break even is much longer since the opportunity costs/TVM are real even if one doesn't want to think about them. I ran the numbers. Comparing to renting at the current price of $16 per point adjusting for inflation on dues and rental costs at 4.5% and assuming a 5% ROR on the money (averaging out the first few years in a MM and the rest at market rates), I get a 14 year break even at $100 per point and a 24 yr break even at $176 PP. If you use cash it'll be a little quicker comparing to DVC but basically almost no one would consistently do DVC on cash.
I think both of our assumptions have flaws. Most people would not actually fit my hypothetical example. But if they did, renting 466 points for AK Club House would not be all that easy. If I used that assumption instead, then of course BE is longer. But even if we assume 14 years for BE, that is not all that long if you plan to hold for 38 years, 45 years or 50 years. And if you decide to sell, you will get some money back. So both of our assumptions and analyses are pure hypothesis.
However, my point was this is why DVC seems like it makes sense for many people. This is why DVC can keep raising prices.
If we all calculated TVM and opportunity costs in making any purchase decisions, we would vacation in our backyard in flyover country. There is no way I would live the life I have or taken the risks I have in my life if I considered TVM and opportunity costs for every decision.
I think what many people here miss is that there are semi-rationale explanations as to why DVC can raise prices and why people still buy.
On a side note, I stay in 1 BR units with views whenever that is an option, even when traveling by myself and always when traveling with DH. I pay a premium for that. If I considered TVM and opportunity costs, why not stay in a studio or hotel room with no view?