Curious about the history of the timeshare resale market pricing

[rrsafety]

Most timeshare does have value. Look at it this way. Imagine a condo in a prime location. The cost to build it runs around 200K or more. Split between 50 weeks and you have a value of around 4000. Much less than retail because of the huge marketing expense, but more than zero for prime timeshare (subprime timeshare however may never have any value).

I still don't see the value. Say if the MFs on that were $550, you'd have yearly MFs for the property of $27,500 ($550x50). I don't know anyone who would see value in a $200k home that required $27,500 in taxes and maintenance each year (in addition to any mortgage).... or as a newbie am I looking at it wrong?

 

[lindner]

Again, you have to be cautious about cause and effect. PCCs have been around for a long time. They exploded on eBay just after the economy tanked. Coincidence? Where do PCCs get the timeshare that they sell? They certainly did not buy from the developer. It is possible that some developers are using them to unload inventory, but clearly that would simply be a short-term economy-related thing, as developers can’t build units and then give them to PCCs to sell for a dollar. Most likely PCCs get their inventory from folks who have suffered misfortune and must sell at any price. Sometimes this is due to death, divorce, etc., which will provide them inventory throughout the economic cycle. However, they also get inventory from folks who are suffering in this economy and must unload luxury like timeshare. In that sense, it is the economy that is partially driving the PCCs which in turn drives down the eBay price.

I don’t like PCCs. They are vultures making a profit off those who through various misfortunes must sell. But if the PCCs were gone, would the situation have turned out significantly different? Those folks who had misfortunes would still be selling or giving away. Many would sell on eBay directly, or use real estate brokers or others who may very well also use eBay. The sales pressure would not have been as extreme, but the prices would still have dropped significantly.

I think you are correct that PCCs have undercut eBay more than other resale venues, probably because they just want to unload at any price which eBay provides. However, timeshare resale prices have also dropped significantly on Redweek, MyResortNetwork, and other venues. Just not as much as on eBay.

The real question many of us are searching for is the root cause of all these declines. This will tell us the likely future of timeshare resales, something that affects all of us.

Some interesting theories have been put forth. One is that folks can now rent for less than they can own, which is true for most timeshare out there. However, even timeshare that can be rented for a profit has dropped significantly in price. There are many here on TUG and elsewhere who rent successfully, and they would doubtless agree that the value of the timeshare they are renting has dropped in value, despite the fact they can rent successfully. Summer weeks on the beach. Mardi Gras in New Orleans. All timeshare resale has dropped in price, even the ones that can be rented at a profit.

However, the same could be said for homes as well, where the economy is doubtless contributing to the decline in home prices. Does that mean that all of us would be wise to sell our homes and simply rent homes? I think all of us realize that eventually the economy will recover, the rent/own situation will reverse and home prices will rise. It may take a while before that happens, and we may be due for more pain before that happens, but eventually it will happen. If timeshare resale follows this model, it too will recover. However, if the drop in timeshare resale prices is due to some other cause, it may never recover.

Having used eBay extensively as one of our sales venues in the years I had the HOA resale portfolio on my HOA board, I can tell you that eBay brought decent prices and everything, even the deep off season weeks sold during the early years I was doing that. When eBay prices tanked had nothing at all to do with the overall economy. It had everything to do with the arrival of the PCC's in force selling on eBay and flooding the market. I had a ringside seat to watch it happen.

Ebay is only a tiny niche of the resale timeshare market, and other parts of that market have not been impacted by eBay so much.

The other thing that is depressing timeshare is the decline in exchange systems. Up until about a bit over a decade ago, timesharing was based on an ownership / exchange model. You had to own to participate, except for the scattered rentals by individual owners and the occaisional developer. Off season weeks had the 45-day window which gave them value. Then RCI started its massive rentals to the public scheme, as well as starting to degrade the 45-day window. This let the public into the benefits without having to own, and that had a direct impact on the value of timeshare, as least to those who wanted to use it to go a variety of places. It also flooded the rental market for those timeshare owners who tried to rent their weeks. All of this impacted the value of timeshare.

The only way to put the genie back in the bottle is for resorts to try to migrate their members to exchange companies which do not rent, and I just do not see that happening, at least on the scale it would need to. RCI has essentially goosed short term profits at the expense of the long term viability of timeshare. The problem for timesharing is that the market has been flooded at several key points by both RCI and the PCC's, and that adds up to continuing problems for the industry.

Interestingly, the developer that started timeshare, Hapimag, is NOT a member of RCI or II, and is doing quite well. Their weeks have good resale value, but that is largely because the developer has a commitment to buy back weeks after a certain period of time at a set price. Given what has happened in the rest of the industry, they tend to shy away from the word ''timeshare'' these days.

 

[lindner]

I still don't see the value. Say if the MFs on that were $550, you'd have yearly MFs for the property of $27,500 ($550x50). I don't know anyone who would see value in a $200k home that required $27,500 in taxes and maintenance each year (in addition to any mortgage).... or as a newbie am I looking at it wrong?

Let's use your numbers above, which are actually conservative (total annual dues are likely more than $27,500). Bear in mind this is the cost of all normal home ownership expenses, not just taxes and maintenance. It also includes utilities, landscaping, savings for the eventual large repair, maids, insurance, and much more. I'll bet if you factor in a reasonable rate to pay yourself for work you do around the house, that you pay more than $27,500 for all these things. In addition to all the things a normal homeowner pays, there are management fees and sometimes even a profit (depending on who runs the complex).

Again, using your numbers, hotels probably pay more than that for their units and have higher vacancy rates, which is why typical hotels cost more than equivalent-sized timeshare.

The real question as far as value is concerned is more complex. First, if you can rent timeshare for less than annual dues, that affects the value. It could even go negative! If a hotel found that their rental income was less than their annual costs, what would happen? Out of business; off the market; gone. If a timeshare rents for less than annual costs, what happens? Much harder for the typical owner to go bankrupt, so they will often pay someone to get rid of it; hence negative value.

Can this go on forever? That's what many of us want to know. Will timeshare rental prices eventually exceed annual dues, or will owners forever face this hole?

 

[timeos2]

However, the same could be said for homes as well, where the economy is doubtless contributing to the decline in home prices. Does that mean that all of us would be wise to sell our homes and simply rent homes? I think all of us realize that eventually the economy will recover, the rent/own situation will reverse and home prices will rise. It may take a while before that happens, and we may be due for more pain before that happens, but eventually it will happen. If timeshare resale follows this model, it too will recover. However, if the drop in timeshare resale prices is due to some other cause, it may never recover.

The basic difference is that timeshare is a luxury and a home a necessity. And timeshares were unfortunately pushed on people ill-informed on the basic value or lack thereof (read poor value off season times with 100% of prime time fees) so now there are far too many being offered and still many buyers fail to recognize the difference between low & high value times. Maintenance fees also play a part as only homes or condos in an association have those fees on top of mortgage, upkeep and taxes while all timeshares by their nature have them.

Timeshare is a very unique subset (a tiny one) of the overall real estate market. It suffers along with all others but doesn't benefit as others can from the high points as the potential upside has been eaten up by the outrageous developer profit margins & marketing costs. No other sustainable market has 50-60% markup along with a near zero resale value. The very folks that built the system are helping kill it and sooner or later they will have to change or watch it all collapse. Hopefully those with a stake in ownership, management as well as building it will find a way to create at least a minimum value for resale before that occurs. ebay among others is a symptom not the cause.

 

[lindner]

The basic difference is that timeshare is a luxury and a home a necessity. And timeshares were unfortunately pushed on people ill-informed on the basic value or lack thereof (read poor value off season times with 100% of prime time fees) so now there are far too many being offered and still many buyers fail to recognize the difference between low & high value times. Maintenance fees also play a part as only homes or condos in an association have those fees on top of mortgage, upkeep and taxes while all timeshares by their nature have them.

Timeshare is a very unique subset (a tiny one) of the overall real estate market. It suffers along with all others but doesn't benefit as others can from the high points as the potential upside has been eaten up by the outrageous developer profit margins & marketing costs. No other sustainable market has 50-60% markup along with a near zero resale value. The very folks that built the system are helping kill it and sooner or later they will have to change or watch it all collapse. Hopefully those with a stake in ownership, management as well as building it will find a way to create at least a minimum value for resale before that occurs. ebay among others is a symptom not the cause.

Agreed. Perhaps a better analogy is a vacation beach home. It is also a luxury and fits into the same subset of the real estate market. Beach home prices are also depressed due to the economy.

Following this analogy further, winter weeks at a vacation beach home are losers. Often these homes sit vacant in the winter or barely cover expenses. They definitely rent for much less than summer weeks. RCI seems to be headed in the same direction with TPUs and points systems. Mud weeks in timeshare are probably never going to exceed zero or negative values. But what about prime timeshare? How about summer beach weeks, or Mardi Gras in New Orleans? If it is the economy that is the primary driver, prime timeshare should see resale prices recover with the economy.

 

[lindner]

Perhaps the driving cause of the zero timeshare resales prices is not eBay, or PCCs, or rental price versus annual dues. Perhaps the driving cause is the developers themselves. They keep churning out more inventory into a possibly saturated market. Imagine if a homebuilder in Miami used excessive marketing campaigns to sell homes. He kept churning out more homes, even though prices in the market were dropping. He built millions and millions of homes and the resale price dropped to zero because no one wanted a home anymore than they currently want timeshare. The homebuilder doesn't care. He keeps churning out more homes as long as his expensive marketing campaign keeps finding suckers willing to pay full retail and then some. Currently this doesn't happen. If prices drop in Miami, then sales of new homes dries up and builders cut back until inventory drops and prices rise again. However, if some homebuilder magically came up with a marketing campaign (free tickets, free cash, etc.) that pulled suckers in, then he would continue to flood the market. Wyndham, Sheraton, Bluegreen, Marriott, etc. will continue to build timeshare and flood the market as long as their marketing brings in suckers to buy. Will that ever stop? Or will Wyndham, Bluegreen, etc. ever follow the model some programs have of right of first refusal, which effectively is a way of them purchasing resales and keeping the resale price up at something close to the cost to build.

 

[timeos2]

Remember an owner of a vacation home or condo also knows there are good to great value times as well as off season they practically can't give away. But one usually offsets the other & they get them all. Timeshare owners may have been convinced to buy a poor week "and go anywhere" but pay the same fees as those enjoying the prime times. The prime owners are being subsidized by the poor weeks & that usually doesn't fly forever. Fees must be in line with value. Except at the limited nearly year round locations that usually doesn't happen.

 

[ronparise]

I know some people lost the use of their week due to Katrina. Also the majority of the owners lost their year of usage at Club Le Pension during the renovation and they still had to pay the MF.

Sure they did, and they paid a big SA that year too; but that wasnt your question, Your question was: do I worry about these things?...I dont

I bought Club la Pension during that time frame from someone that was affected. My bet was that now that the renovations are done, I dont have to think about that particular issue for a while..Same with Avenue Plaza, they recently completed their renovation too

 

[BocaBum99]

To simplify the answer - the decline in resale value is date co-incidental with the rise of eBay and other electronic markets as nearly all the "blue sky" value is let out of the intervals for sale and they are sold as commodities.

"Blue sky" value in an item is any value other than the intrinsic utilitarian value. "Blue sky" value is what the time share sales weasels over blow in a resort presentation.

FYI "Blue sky" value is also rampant in the fashion industry - $325 worth of silk, intern design work and sewing sold for $13,000 because of the name on the label.

I get your idea of "Blue Sky" value. However, your notion of instrinsic utilitarian value is total hogwash. There is no such thing. Value of anything depends on an individuals personal preference and varies dramatically for everything in the world. There is absolute cost to make something, but value is in the eye of the beholder and even with a given person, it changes over time, even daily.

Value is when personal utility is greater than total cost (including opportunity cost). "Blue Sky" value happens when a sales guy convinces a tour guest to suspend their normal rationale brain to believe that the utility of a timeshare is far greater than the cost they are presenting.

 

[ampaholic]

I get your idea of "Blue Sky" value. However, your notion of instrinsic utilitarian value is total hogwash. There is no such thing.

Hogwash?, that's a little extreme - a week in a timeshare is at minimum a week not living on the street getting rained on and robbed - to most rational people that means some minimal value.

Just because you can't peg a value doesn't mean it doesn't exist and just because the value is small also doesn't mean it doesn't exist.

Evan a rubber band or a claw hammer has an intrinsic value - it can be argued what the value of a claw hammer is - depending on if you have a nail to manage or not, but you are short sighted if you say it has no value and you throw it into the bay.

And it's not my notion - it is why developer salesweasels are not routinely charged with fraud while PCC salesweasels are.

 

[BocaBum99]

Hogwash?, that's a little extreme - a week in a timeshare is at minimum a week not living on the street getting rained on and robbed - to most rational people that means some minimal value.

Just because you can't peg a value doesn't mean it doesn't exist and just because the value is small also doesn't mean it doesn't exist.

Evan a rubber band or a claw hammer has an intrinsic value - it can be argued what the value of a claw hammer is - depending on if you have a nail to manage or not, but you are short sighted if you say it has no value and you throw it into the bay.

And it's not my notion - it is why developer salesweasels are not routinely charged with fraud while PCC salesweasels are.

You are right. Hogwash is the wrong word. It's not strong enough. It's total and utter hogwash.

There is no such thing as "intrinsic utilitarian value." Value is in the eye of the beholder. Therefore it varies from negative to positive. If you believe something has intrinsic utilitarian value, that is YOUR personal preference and assignment. It's not universal which is what intrinsic implies.

Let's make a test to see who is right. Pick any product and state its intrinsic utilitarian value on this thread. Then, let's have 100 people vote. If all 100 agree with you, you are correct. If anyone disagrees, you are pwned.

No need to run the test. You are pwned.

 

[ronparise]

I think we may all have a different definition of intrinsic value . Intrinsic value is the value of a thing, in and of itself..

Regarding timeshares: Is it salvage value?, is it the value of the condo if it wasnt a timeshare?, is it its value as an income generator, ie the current value of the future cash flow? is it the cash value of the vacations it offers my family. or how much it saves me over the cost of a hotel room?

I would argue that the intrinsic value of a timeshare is nothing. In and of itself its worthless, Value is added by the person using it, and of course once you add value, its not intrinsic any more

Had another thought:

I bought a timeshare earlier this year that had intrinsic value. when I bought it fees were paid through the end of the year and there was a week that was mine to use. I rented it for $1000...so the intrinsic value was $1000 for which I paid $100...Now if I sell it this year, Im selling something with no intrinsic value

 

[ampaholic]

To answer your question:

11

11 is the number of Angels that will fit on the head of a pin.

Or to put it another way Boca - I refuse to have a battle of wits with an unarmed man.

Welcome to my ignore list - EOM

 

[timeos2]

Of course there is an intrinsic value as someone - it may not be the timeshare slice owners - can always cash in on the property itself and possibly the existing buildings. How that could happen is problematic but that doesn't erase the fact that real estate - especially in resort areas - has a value. And usually a fairly high one per acre.

It's all semantics anyway. The plain fact is that someone - somewhere could turn around and sell that piece of land. If nothing else is worth anything - although it probably is - then the intrinsic value is the underlying land value. No amount of banter will cause that to go away.

If all that exists is a building on land not owned then it may be harder to find but even an old building in historic/resort areas tend to have a fair value. Again that cannot be erased by proclamation here or anywhere else. it is what it is - a value to someone.

 

[Carolinian]

I was watching this directly as to eBay because I was handling our HOA sales and we were using eBay. For blue weeks and often white weeks, they always sold on eBay and always for more than the going rate for HOA resales at the local broker. The PCC's disrupted that well before the economic crisis hit because I had a front row seat watching it happen. I resigned my HOA seat to move to Europe in July 2007, about a year before the economic crisis and eBay sales had gone to crap around two years prior to that. That was when we saw the big upsurge in PCC listings on eBay.

As to rentals on the OBX, for prime weeks they are still strong. I increased the rental rate through our local broker this year, and had no problem getting a renter. I may increase it again for next year.

Again, you have to be cautious about cause and effect. PCCs have been around for a long time. They exploded on eBay just after the economy tanked. Coincidence? Where do PCCs get the timeshare that they sell? They certainly did not buy from the developer. It is possible that some developers are using them to unload inventory, but clearly that would simply be a short-term economy-related thing, as developers can’t build units and then give them to PCCs to sell for a dollar. Most likely PCCs get their inventory from folks who have suffered misfortune and must sell at any price. Sometimes this is due to death, divorce, etc., which will provide them inventory throughout the economic cycle. However, they also get inventory from folks who are suffering in this economy and must unload luxury like timeshare. In that sense, it is the economy that is partially driving the PCCs which in turn drives down the eBay price.

I don’t like PCCs. They are vultures making a profit off those who through various misfortunes must sell. But if the PCCs were gone, would the situation have turned out significantly different? Those folks who had misfortunes would still be selling or giving away. Many would sell on eBay directly, or use real estate brokers or others who may very well also use eBay. The sales pressure would not have been as extreme, but the prices would still have dropped significantly.

I think you are correct that PCCs have undercut eBay more than other resale venues, probably because they just want to unload at any price which eBay provides. However, timeshare resale prices have also dropped significantly on Redweek, MyResortNetwork, and other venues. Just not as much as on eBay.

The real question many of us are searching for is the root cause of all these declines. This will tell us the likely future of timeshare resales, something that affects all of us.

Some interesting theories have been put forth. One is that folks can now rent for less than they can own, which is true for most timeshare out there. However, even timeshare that can be rented for a profit has dropped significantly in price. There are many here on TUG and elsewhere who rent successfully, and they would doubtless agree that the value of the timeshare they are renting has dropped in value, despite the fact they can rent successfully. Summer weeks on the beach. Mardi Gras in New Orleans. All timeshare resale has dropped in price, even the ones that can be rented at a profit.

However, the same could be said for homes as well, where the economy is doubtless contributing to the decline in home prices. Does that mean that all of us would be wise to sell our homes and simply rent homes? I think all of us realize that eventually the economy will recover, the rent/own situation will reverse and home prices will rise. It may take a while before that happens, and we may be due for more pain before that happens, but eventually it will happen. If timeshare resale follows this model, it too will recover. However, if the drop in timeshare resale prices is due to some other cause, it may never recover.

 

[Carolinian]

I think you are correct, as this is another thing flooding the market or at least some parts of it. There have been no new beachfront timeshares built on the OBX in years, and in fact two of them crashed due to using the same local management company that pulled some fast ones with their hurricane insurance money which left them sitting ducks for attacks by their former devlopers. The fact that supply has contracted has helped values. The only timeshare still in developer sales is way off the beach and it doesn't really impact the values of beachfront timeshares.

Market flooding by developers probably impacts most in areas that are already overbuilt. So add this to the eBay market flooding by the PCC's and the timeshare rental market flooding by RCI's rentals to the general public. At the same time demand is down due to the economy and the fact that RCI has destroyed the exclusivity aspect of timeshare and now it is possible to rent as cheap or cheaper than owning. Changes in the exchange system have also supressed demand. So it really is a perfect storm.

BTW, one timeshare I would like to find on eBay for $1 is Isle of Palms Beach Club, which is in your neck of the woods, but that is one you never see.

Perhaps the driving cause of the zero timeshare resales prices is not eBay, or PCCs, or rental price versus annual dues. Perhaps the driving cause is the developers themselves. They keep churning out more inventory into a possibly saturated market. Imagine if a homebuilder in Miami used excessive marketing campaigns to sell homes. He kept churning out more homes, even though prices in the market were dropping. He built millions and millions of homes and the resale price dropped to zero because no one wanted a home anymore than they currently want timeshare. The homebuilder doesn't care. He keeps churning out more homes as long as his expensive marketing campaign keeps finding suckers willing to pay full retail and then some. Currently this doesn't happen. If prices drop in Miami, then sales of new homes dries up and builders cut back until inventory drops and prices rise again. However, if some homebuilder magically came up with a marketing campaign (free tickets, free cash, etc.) that pulled suckers in, then he would continue to flood the market. Wyndham, Sheraton, Bluegreen, Marriott, etc. will continue to build timeshare and flood the market as long as their marketing brings in suckers to buy. Will that ever stop? Or will Wyndham, Bluegreen, etc. ever follow the model some programs have of right of first refusal, which effectively is a way of them purchasing resales and keeping the resale price up at something close to the cost to build.

 

[lindner]

I was watching this directly as to eBay because I was handling our HOA sales and we were using eBay. For blue weeks and often white weeks, they always sold on eBay and always for more than the going rate for HOA resales at the local broker. The PCC's disrupted that well before the economic crisis hit because I had a front row seat watching it happen. I resigned my HOA seat to move to Europe in July 2007, about a year before the economic crisis and eBay sales had gone to crap around two years prior to that. That was when we saw the big upsurge in PCC listings on eBay.

As to rentals on the OBX, for prime weeks they are still strong. I increased the rental rate through our local broker this year, and had no problem getting a renter. I may increase it again for next year.

Do you perhaps have data on OBX resale prices going back to your time on the board? Perhaps even you could differentiate between eBay prices, the prices your HOA got for resale, and prices on Redweek/MyResortNetwork/etc.? That would be some useful data to gauge the effect of eBay. I have no doubt that PCCs caused some of the decline (by flooding that particular market) but it would be fruitful to this discussion how large the decline is in HOA resale prices or prices on other venues where PCCs are not so prevalent.

Your OBX facts are interesting, although different from my data. I have tracked eBay resale prices for points since 2004. The price barely moved between 2004 and 2007 even though sales volume doubled. Prices began a slow decline of perhaps 20% from early 2007 until late summer of 2008 and then began a freefall over the next two years and actually turned negative (free usage was being thrown in) as volume doubled again. For the past two years prices have held steady and sales volume has held steady. A graph of this would show almost a stairstep pattern, which really begins with the financial crisis of 2008.

 

[LannyPC]

How about the cost of travel. Right now accomodations are not a major vacation cost. Transportation and eating are!

Exactly! That's why the timeshare industry is so beleaguered right now. Because of the economy, many people are trying to shed luxuries. While timeshares are on that list, non-essential, leisure travel is also on that list.

The timeshare industry is dependent on a healthy non-essential leisure travel industry. Forget about what upfront fee scammers say (we here at TUG do so anyway), corporations are not buying large blocks of timeshares for tax write-offs.

I know many people complain about the skyrocketing MFs, but what people usually pay for MFs is generally a good deal to stay in a villa with full kitchens, bathrooms, living rooms, washers/dryers, etc. The problem many disgruntled owners (who are wanting to get out of their timeshare) are having is they can't afford to get to their timeshare.

Other prices to tack onto non-essential, leisure travel: Car rental, gas, parking, admission to attractions, sight-seeing, leisure activities (golf, horse-back riding, scuba, fishing, etc.), etc. After all, if we're not working, we have to find something to fill the time. Those activities usually cost money.

Now how does this relate to the original topic? Timeshare resale prices are so much lower probably because those who bought retail were probably fast-talked by the salesperson into believing that buying this timeshare would drastically reduce traveling expenses when, in reality, all it does is reduce accommodations expenses which, like Ebram said, is only a small portion of the overall vacation expenses.

 

[ronparise]

Exactly! That's why the timeshare industry is so beleaguered right now. Because of the economy, many people are trying to shed luxuries. While timeshares are on that list, non-essential, leisure travel is also on that list.

The timeshare industry is dependent on a healthy non-essential leisure travel industry. Forget about what upfront fee scammers say (we here at TUG do so anyway), corporations are not buying large blocks of timeshares for tax write-offs.

I know many people complain about the skyrocketing MFs, but what people usually pay for MFs is generally a good deal to stay in a villa with full kitchens, bathrooms, living rooms, washers/dryers, etc. The problem many disgruntled owners (who are wanting to get out of their timeshare) are having is they can't afford to get to their timeshare.

Other prices to tack onto non-essential, leisure travel: Car rental, gas, parking, admission to attractions, sight-seeing, leisure activities (golf, horse-back riding, scuba, fishing, etc.), etc. After all, if we're not working, we have to find something to fill the time. Those activities usually cost money.

Now how does this relate to the original topic? Timeshare resale prices are so much lower probably because those who bought retail were probably fast-talked by the salesperson into believing that buying this timeshare would drastically reduce traveling expenses when, in reality, all it does is reduce accommodations expenses which, like Ebram said, is only a small portion of the overall vacation expenses.

If I accept your argument, are we saying that the value of my timeshares is so low because folks cant get to their favorite vacation spot on a reasonable budget? I dont buy that..

I was at the Universal Studios City Walk in Orlando recently and the place was packed. . I was staying at Wyndhams Bonnet Creek resort, and it was packed too (over 1000 units). I was at Wyndhans Grand Desert in Las Vegas this past April, (packed) Orlando last Christmas, (packed), and at Wyndhams National Harbor, last Thanksgiving (it was packed too)

I live in SW Florida..This past winter I didnt notice any less traffic on our roads, and my clients that rent their homes and condos for the season were successful doing it. The "Snow Birds" are still flying south every winter

There are no doubt some folks that cant afford vacations, but even if unemployment is at 20%, that means 80% are still working and able to afford a vacation, and then there are all us baby boomers. Every year there is another slug of us that retire, and have nothing to do except vacation, as a group we have the money to do it

There are still plenty of folks traveling and vacationing in spite of the economy and travel costs, and the resorts are getting used. And yet the value of Wyndham timeshares is near zero...there must be another reason than airfare and $4.00 gas

 

[Carolinian]

I do have lots of materials from that period stored in boxes back in North Carolina, but I will not be back on that side of the pond again until probably October.

I think one major difference in market patterns may be that people buying points are going to be primarily exchangers, while the majority buying a weeks based product resale will be own-to-use buyers, and likely there will be somewhat different patterns among them geographically.

Do you perhaps have data on OBX resale prices going back to your time on the board? Perhaps even you could differentiate between eBay prices, the prices your HOA got for resale, and prices on Redweek/MyResortNetwork/etc.? That would be some useful data to gauge the effect of eBay. I have no doubt that PCCs caused some of the decline (by flooding that particular market) but it would be fruitful to this discussion how large the decline is in HOA resale prices or prices on other venues where PCCs are not so prevalent.

Your OBX facts are interesting, although different from my data. I have tracked eBay resale prices for points since 2004. The price barely moved between 2004 and 2007 even though sales volume doubled. Prices began a slow decline of perhaps 20% from early 2007 until late summer of 2008 and then began a freefall over the next two years and actually turned negative (free usage was being thrown in) as volume doubled again. For the past two years prices have held steady and sales volume has held steady. A graph of this would show almost a stairstep pattern, which really begins with the financial crisis of 2008.

 

[Mel]

I still don't see the value. Say if the MFs on that were $550, you'd have yearly MFs for the property of $27,500 ($550x50). I don't know anyone who would see value in a $200k home that required $27,500 in taxes and maintenance each year (in addition to any mortgage).... or as a newbie am I looking at it wrong?

Agreed. Perhaps a better analogy is a vacation beach home. It is also a luxury and fits into the same subset of the real estate market. Beach home prices are also depressed due to the economy.

Following this analogy further, winter weeks at a vacation beach home are losers. Often these homes sit vacant in the winter or barely cover expenses. They definitely rent for much less than summer weeks. RCI seems to be headed in the same direction with TPUs and points systems. Mud weeks in timeshare are probably never going to exceed zero or negative values. But what about prime timeshare? How about summer beach weeks, or Mardi Gras in New Orleans? If it is the economy that is the primary driver, prime timeshare should see resale prices recover with the economy.

Yes, a vacation home! Consider thecosts associated with a vacation home - all of the costs. But also consider depreciation, which might account for your reserves. Real estate depreciates at around 4% per year, and represents using up the property overits lifetime. If you spend that amount on improvementseach year your basis doesn't change. Given the tax returns I did for clients with rental property, it's notsurptising people are losing money. Even house rentals have been losers lately. It is theeconomy!

 

[LannyPC]

There probably is another reason. But when we see/hear newbies come on here asking how they can get rid of their (or their aging parents') timeshares, one of the things they mention is that they can no longer travel either due to health or finances.

With more and more people wanting to get out of their timeshares, it's causing the values of timeshares to go down (law of supply-and-demand).

As for all those tourists you saw in Florida, well, maybe they are not as affected by the economy as most.

Then other questions arise. For instance, we hear of so many owners deliberately defaulting on their MFs to try to divest themselves of ownership and the obligatory MFs. Are they doing that because they feel that the MFs are a tad too high (IOW they'll gladly pay if the MFs are $750 but won't if they're $900) or because they don't want to pay any MFs on something they can't afford to travel to?

 

[rrsafety]

For instance, we hear of so many owners deliberately defaulting on their MFs to try to divest themselves of ownership and the obligatory MFs. Are they doing that because they feel that the MFs are a tad too high (IOW they'll gladly pay if the MFs are $750 but won't if they're $900) or because they don't want to pay any MFs on something they can't afford to travel to?

For some it might be the fact that MFs might be going up (as some suggest) 6% a year and the price of rentals are staying flat. Not too hard to see the math in that: The price to get rid of a timeshare in the future will be significantly higher years down the road.

 

[Maple_Leaf]

The Retiree Tax

Timeshares are disproportionately owned by retirees, since they have the time to travel. Retirees are being subjected to a new tax for which there has been no legislation. This "Retiree Tax" is not administered by the IRS, but the Federal Reserve. It's not even known as a tax, but as the Zero Interest Rate Policy (ZIRP). Retirees are earning essentially zero off of their savings. That's why timeshares can sell for $1 while Disney World is full of visitors, the Disney visitors aren't subject to the Retiree Tax, they are mostly working people paying close to zero for their debt. ZIRP hurts the debt-free retiree, but helps the debt-laden working family. When their investment income moves toward zero, retirees sense the cash crunch and look to dump their timeshares, a luxury item with increasing maintenance fees. Until ZIRP is stopped and the Retiree Tax lifted, timeshares prices will approach zero, or less.

 

[DebBrown]

I'm staying out of the philosophical debate and sharing my personal experience. We've been in timesharing since 1997. We've never bought anything retail and for years I managed the historical sales database here at TUG.

In the late 90s, timeshares could be bought at a big discount resale but not like today. We didn't see anything selling for $1 on ebay. Maintenance fees were lower and the effective cost of owning and exchanging was lower than renting.

I've only seen the mass amount of $1 and free timeshares in the past couple of years since the economy downturn. And even at zero cost, I'm not buying today. I can rent from owners and travel cheaper than making the commitment to the high end maintenance fees.

Deb