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Have HGVC Resale Values Hit the Bottom?

JSparling

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I've been talking with a Tug friend and we were thinking about this question - have the resale values for the most popular HGVC unit* (2BR platinum, 7,000 points) hit the bottom of the market or will they go down further?

First, I'll qualify my * comment about the "most popular" HGVC unit. Based on what I've seen watching prices over the years the 7,000 point, 2BR units are what resell for the highest $. I'm sure there are people who have other units/sizes they would say are the best/most desirable, but from what I've seen and for the purpose of this conversation, I'll focus on the 2BR platinum units.

Anyway, Tug Friend and I are thinking about the market, the current going price for this type of unit, and the future. I know of 4 recent purchases of these units for $6,000 each. While many mention the standard $1/point pricing ($7,000 for a 7,000 point unit) I have seen prices drop down to $6,000. That doesn't mean that's the current market price, that could be just a few lucky buyers and/or desperate or uneducated sellers. Or it could mean a unit that a year ago went for no less than $7,000 now can only garner $6,000?

What's this unit going to go for in a year? In 5 years? At some point there is a bottom. And I don't think it's $0. I don't ever seen HGVC units being in the Bargain Basement.

What will the new properties (Hilton Head, Maui) and future expansion do to resale prices? Surely ("don't call me Shirley" - Airplane) these new properties will have MF's much higher than the lowest properties in Vegas. So at some point do the owners of these units at the low MF properties turn into the "White Whales" of the Club and own the coveted units with rock bottom MF's? Perhaps over time could the resale price for these units actually go back up if the new properties continue to have higher and higher MF's?

The underlying point of this question is about what's going to happen 20 or 30 years down the road when our kids get stuck with the various units my wife and I have bought? Is buying up some of these units now wise because the MF's are so low at the Strip and Karen/Paradise/Convention Center? Last year the MF for our 2BR platinum at the Strip was $787 and for the same unit at Kings' Land it was $1,484. If you're looking to build a portfolio is now a good time to grab some points that will hold their value?
 
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Ralph Sir Edward

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There are several way to look at this.

First - ROFR activity. Corporate level ROFR activity tends to put a bottom on price, as long as the Corporation is buying. which leads to the second thing to consider...

The status of the economic cycle. Bottoms of speculative properties are in the late stages of an economic downturn. That is when strapped owners sell at any price to reduce their economic liability.

Third, the demographic cycle. old people don't travel, so those who don't plan to leave them for their descendants (if any), will be dumping them (as best they can). That will be a continual selling pressure for the next 20 or so years.

Hope this helps...
 

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Price and MF have an inverse relationship. As the MF goes up at a particular location in relation to the other possible locations, resale value will go down. The best way that I have found to analyze the problem is by looking at the MF cost per point.

The cheapest MF to point ratio doesn't actually exist in Vegas. It is at the 28,750 point unit at the Grand Waikikian. This MF to point ratio is around $0.10 per point per year. The best you will find in Vegas is around $0.112 cents per point. Initial cost and carrying cost are the reasons you would opt for one over the other, but the decision comes with a 12% premium despite each point being worth the same amount in terms of resort usage.

The higher point units hold their value more not because the number of points that they have but because of the MF cost per point. No matter what happens to MFs at a various property, the higher point units will always hold their value better.

The problem with stockpiling units at a particular property is that Hilton can up the MF at that location and then you are stuck. I agree that Vegas should be the cheapest for some time to come at the 7,000 point level, but Florida used to be the cheapest. Insurance costs went up and now Florida is in 2nd place.

I would only buy the points that you need and not worry about stockpiling for the future. You mentioned $6,000 for a $7,000 point unit in Vegas. I bought one for $5,500 all closing costs included.

As long as Hilton keeps adding inventory, prices will most likely decrease. The utility of each unit goes with with the new locations, but the demand is not outpacing the supply. As the supply grows, prices must fall to meet the demand.

Hilton has all but abandoned its ROFR for most units, which has only added to the demand side problems. If this continues, prices will continue to fall as well.

One thing I learned when reading the threads from this community was that buying a timeshare is not an investment. Don't worry about trying to find a price bottom like some do in the stock market. Purchase what you need for your family and let the market forces play themselves out.
 

JSparling

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Price and MF have an inverse relationship. As the MF goes up at a particular location in relation to the other possible locations, resale value will go down.

This is true if you only consider a single property. As the MF goes up for Unit A then the resale value for Unit A goes down. I agree.

But when you consider all units - A, B, C, D - this may not be true and may be exactly what I'm trying to figure out. If MF on Unit A goes up, and Hilton opens new property called Unit B and it has higher MF's, then the resale value of Unit C goes UP if Unit C MF's are still the lowest. Right?

If I own at property 1 and property 1 always have the lowest MF's then it's more likely that my units at property 1 will hold their value better than others.
 

Jason245

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There is a flaw to your question, and that is treating this ownership like something that might go up in value.

The reality is that your buy in to HGVC is most probably a sunk cost. Furthermore, lets say you bought 7000 points for ~$7k, and were somehow able to sell it 10 years later for the same $7k. If you sell through an agent they will get somewhere between 10-25% probably on the sale (meaning that you walk away with a max of what ~$6k. Factor in inflation and all of a sudden, your 6K is probably worth closer to ~5k and you lost ~$2k in real dollars.

You should walk into this expecting your points to be worth NOTHING the day after you buy. If you end up better off, then good for you, if not, then you are ready.

There is also NO GUARANTEE that the MF won't significantly increase at any resort. It is also possible that you could be hit with a LARGE special assessment if the MF are too low.

My recommendation, buy what you need for as inexpensive as you can find and afford. While $6k for 7k points might be a good deal today, in a month it could be a terrible deal, but if you can truely spend $5k without noticing it, and you need those points for vacations you are planning on taking over the next 10-20 years, then go for it.


BTW:

http://tugbbs.com/forums/showthread.php?t=232308

Bargain basement HGVC.
 

JSparling

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One thing I learned when reading the threads from this community was that buying a timeshare is not an investment. Don't worry about trying to find a price bottom like some do in the stock market. Purchase what you need for your family and let the market forces play themselves out.

This ties in with a thread here regarding Dave Ramsey:

http://tugbbs.com/forums/showthread.php?t=232618

The word "Investment" has a lot of meanings. The most obvious is that you want to buy something, have it earn you money, and then sell it for a profit. But what about "investment" in terms of saving you money? If I can get a 7,000 unit that all-in (purchase, close, transfer, MF's) over 20 years costs me $0.16/point then, on average, I've traveled to Hawaii for 7 nights a year in a 2-bedroom condo for $1,120/year or $160/night. In the thread I mentioned above I equated "investment" to "heavily discounted travel".

You could look a car this way (as being an investment). We all agree that a typical car does nothing but lose value. And when it's got 150,000 miles on it and is 10 years old it really has little value (especially when compared to the original purchase price). But if I can get 150,000 out of a $20,000 car is that something worth "investing" in?

There absolutely isn't a traditional investment/return on timeshares. But for heavily discounted travel they perform nicely. And if my little 7,000 point units stay at the lowest MF property then I think they'll hold their value nicely over time (especially if other MF's go up as fast or faster).
 

JSparling

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The cheapest MF to point ratio doesn't actually exist in Vegas. It is at the 28,750 point unit at the Grand Waikikian. This MF to point ratio is around $0.10 per point per year. The best you will find in Vegas is around $0.112 cents per point.

What about a penthouse in Vegas? 1BR platinum penthouse at the Strip is 6,200 points and the MF's are $570. So that's $0.092 cents per point.
 

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What about a penthouse in Vegas? 1BR platinum penthouse at the Strip is 6,200 points and the MF's are $570. So that's $0.092 cents per point.

So I went to the reseller websites and looked at all of the different units for sale and their associated MFs. I did this exclusively for HGVC resorts so that I would be comparing apples to apples.

I included the $140 club fee in all of my calculations, which would bring that unit to $0.1145, but I didn't actually see that specific type of unit for sale when I ran the numbers.

I think this is the reason that Hilton set it's dollar value at $0.10 a point for trades with airlines and cruises. Hilton will always come out on top.
 

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This is my first post although I have read these threads for years. I have never been compelled to reply or comment as I am with this conversation.

The service that TUG and all of you provide is truly immeasurable. The intelligent conversation taking place in this thread is why this is such an important resource for those wanting to learn about timeshare ownership.

At some point, I will need help and its reassuring that I have a place to seek it. Thank you all for the education and entertainment. Please don't take for granted the service you provide to newbies like me.

P.S. I am sorry I can add anything substantive to this tread but some day (hopefully soon) I will be.
 

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The only direction I have seen HGVC timeshare resale prices are down:rofl:

I was stupid enough to buy even more but hopefully I'll use it:banana:

That is the only attitude you must take, or sell at the loss:bawl: but vacation worse or not at all, so buy, buy, buy:whoopie:
 

JSparling

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So I went to the reseller websites and looked at all of the different units for sale and their associated MFs. I did this exclusively for HGVC resorts so that I would be comparing apples to apples.

I included the $140 club fee in all of my calculations, which would bring that unit to $0.1145, but I didn't actually see that specific type of unit for sale when I ran the numbers.

I think this is the reason that Hilton set it's dollar value at $0.10 a point for trades with airlines and cruises. Hilton will always come out on top.

I got it from Seth Nock last year. Great acquisition! And my numbers did not include the $140 and I don't think they should (which we've discussed to death in various other threads).

You really just need the MF for any size unit at any property and then go to the point charts and you can do all the math for that sized unit in the various seasons since the MF is the same for all 1 bedrooms and all 2 bedrooms, etc (as you know). A penthouse is no different in that a platinum 1BR penthouse with 6,200 points has the same MF as a gold 1BR for 3,400 points at the same property. You could say the season for a platinum penthouse is "double platinum". Penthouse sales are rare and precious!
 
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vacationbear

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I fully agree that a TS purchase is not an "investment" in the traditional sense.
Its price has the same trajectory as a car: down!
Yes, the >7000 pts TS fetch higher $$$, and this is the reason why we bought 8400 & 12600 pts. But I would be more than happy to get 40% to 50% of the initial purchase price getting back after, say, 20 years.
For all intense and purposes I consider that money lost... :eek:

However, there is a certain "return on investment" which can be objectively and subjectively specified.

Objectively (and using Lagoon Tower as an example):
One gets a 2bd for 7 nights for ~$1500 (MF). By comparison I would pay ~$500 for a Rainbow Tower room.
7 x $500 = $3500 - $1500 (MF) = $2000 savings per week. :)

But wait- I would have to book TWO Rainbow Tower rooms (and still don't get the nice, big kitchen and dining room!!!) so the annual savings are $4000! :banana:


Subjectively:
Our last three visits at the LT were among the very best vacations we ever had! Room, amenities, beach, pools, Honolulu- all perfect.
ROI for that: priceless!:cheer:

Just my 5 cents...
:wave:
 

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In my opinion the only way to analyze a timeshare is as a prepaid vacation -- not as an investment of any kind. I bought a resale 7000 point Hilton timeshare in 2010 at South Beach for $7,000.00. It is our one and only timeshare and we remain very happy with the purchase even though annual maintenance and other fees have increased from $1175 to $1550.00 in 5 years. That is about 6% per year. Keep in mind that maintenance fees must increase unless salaries, insurance, real estate taxes, Hilton's huge management contract and maintenance costs decrease. That is not likely to happen so one must expect annual increases.

I continue to analyze my purchase on what the cost of a two bedroom two bath hotel room would be in the center of South Beach. Granted we have no pool, restaurant or spa but we have a huge pool across the street. I come to the conclusion that I still receive substantial value. The maintenance fees are higher (much higher) than Las Vegas but the 9-12 month window has a value for us. We use our points for South Beach about three times per year but have also used them for Borgo Alle Vigne (great place) and once in Las Vegas. Whether we paid $6,000 or $9,000 to purchase the analysis would not differ. Paying full retail clearly would affect the analysis and I would probably reach a different conclusion if that were the case. But if I had to do it all over again, I would do exactly the same thing.
 

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The maintenance fees are higher (much higher) than Las Vegas but the 9-12 month window has a value for us. We use our points for South Beach about three times per year but have also used them for Borgo Alle Vigne (great place) and once in Las Vegas.

Hi

Sorry but I dont understand how you can goto SB tree times per year and still use the 9-12 month window? Normally the priority window from 9-12 months out requires a full week and also all available points?

Regards.
 

JSparling

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ROI for that: priceless!:cheer:

I've got two young daughters and we go to Breckenridge (Valdoro) and Hawaii (Kings' Land) each year. We actually get to Breck 2 or 3 times a year. I couldn't agree more - priceless! (and WAY cheaper than if we had to pay for a hotel room or two and realistically we wouldn't which means none of this would happen).
 

1Kflyerguy

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I wonder how many actual new units are added to inventory each year, and how that compares with the number of resale units?

They are building the new resorts and its pretty obvious they have stopped or slowed down on the ROFR.

I don't think Maui or Hilton Head are actually for sale yet, so we won't see that inventory for a while yet.

Grand Islander and KL phase 3 are selling new inventory. I think they are still adding in Marbrisa, but not sure how much more they have go there. ..How about other resorts, are they still building anywhere else?

I checked a few of their quarterly statements, and they had five years of supply at the beginning of 2015, and are now up to six years..
 

Jason245

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I wonder how many actual new units are added to inventory each year, and how that compares with the number of resale units?

They are building the new resorts and its pretty obvious they have stopped or slowed down on the ROFR.

I don't think Maui or Hilton Head are actually for sale yet, so we won't see that inventory for a while yet.

Grand Islander and KL phase 3 are selling new inventory. I think they are still adding in Marbrisa, but not sure how much more they have go there. ..How about other resorts, are they still building anywhere else?

I checked a few of their quarterly statements, and they had five years of supply at the beginning of 2015, and are now up to six years..
When you remember that every room equals 104 intervals of potential sale time if sold as eoy... you can see how adding 100 rooms really ads up to a lot of inventory.

On top of that hgvc seems to be offering resale intervals themselves for cheap (based on other pricing ) (When I was in south beach, they were selling 1 br gold season at like 5k.)

Ironically, they need this capacity in the system so that there is ample availability for booking in non home resorts. If they had no unsold inventory, booking during home week would become more and more essential because availability would become more restricted.

Sent from my SAMSUNG-SM-N910A using Tapatalk
 

GregT

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All,

This is a good thread discussing many different approaches to timeshare ownership, which often involves a financial component (ie, is it an investment/poor time value of money)..

This is perhaps my favorite thread from TUG -- a genuine classic that has greatly influenced my perspective on this point.

Best,

Greg
 
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JSparling

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Still stuck on the idea of an "investment" and how different people have different interpretations of this word. It's safe to say, however, that we all agree you need to understand when you buy a TS that you will never be able to sell it for what you bought it for. Consider it a sunk cost, enjoy many years of heavily discounted, pre-paid travel with your family, and then sell it for what you can and be happy about it.

In thinking about the "investment" and what it has cost me...........or more importantly what it has earned for me I remembered this story.

It was 2000 and I was in Vegas at the Flamingo going through the HGVC presentation for the first time. My friend and I decided to buy a week to share based on a variety of reasons but none more important than the idea of "forced family vacations."

Our salesman explained the program, of course, but also described our purchase as a committment to our families because we would be forced to take annual family vacations by virtue of pre-paying for them (in a sense) and not wanting that money to go to waste. He explained that if we had already paid a week of lodging we would go and use it. If we needed to come up with a big chunk of money to book a hotel for a week we likely wouldn't. We'd find other uses for that money or find reasons not to go.

This idea still holds true today over 15 years later. We have enough points for x weeks of travel so we're going to use those damn things if it kills me. And the result has been tons of great trips. My seven year-old loves it, can't wait for the next trip, and is definitely growing up to appreciate and enjoy travel. I see it as a type of education for her. And, of course, the family time and memories are priceless.
 

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Cyberc, we have owned our unit 5 years. One of those years we have used the entire 7000 points for a 1 week stay and at other times we have broken it up into three long weekends. Also, one year we did not use all of our points and carried points over to the following year so we stayed at Borgo Alle Vigne and spent weekends at South Beach. Lastly, we have bought days during open season for long weekends. So technically we have only used the 9-12 month window once but when I retire (shortly I hope) we expect to use it more. We will not buy any more points because we also expect to vacation during the year outside of the HGVC framework.
 

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All,

This is a good thread discussing many different approaches to timeshare ownership, which often involves a financial component (ie, is it an investment/poor time value of money)..

This is perhaps my favorite thread from TUG -- a genuine classic that has greatly influenced my perspective on this point.

Best,

Greg

Yeah, thanks for sharing. Although my wife is mad at me still for spending north of 10K for our timeshare purchases ... I know she is still happy when we go on vacation in Hawaii. She has no idea how much a week would cost otherwise. I figure 5 trips to Hawaii, and I will easily re-coupe the upfront costs in savings.

But most importantly, as the thread you linked to pointed out, it is the investment in family and not money that ultimately is what counts in life, that helps me to not ever regret my purchase (in terms of lost money).

And I do agree, you can probably always get a better deal if you wait a year or two or three, because I believe resale will keep on going down. So, buy what you need, and that's all, no need to buy extra points until you really need more.

Great3
 
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Ralph Sir Edward

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Just won 2 EOY Odd Bay Club "A" Penthouse weeks for $548 each, including closing costs.

I bought them for snowbirding in Hawaii, so the point are immaterial...

As far as I am concerned, the $548 each is a pure write-off. The only costs that matter to me are the MFs.

(But yes, you can sometimes make a profit on a timeshare (exclusive of MFs). I bought Marriott Royal Palms Red season in 2012 for $1600 (including closing costs) and sold it back to Marriott early this year for $3700...)
 
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Jason245

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Just won 2 EOY Odd Bay Club "A" Penthouse weeks for $548 each, including closing costs.

I bought them for snowbirding in Hawaii, so the point are immaterial...

As far as I am concerned, the $548 each is a pure write-off. The only costs that matter to me are the MFs.

(But yes, you can sometimes make a profit on a timeshare (exclusive of MFs). I bought Marriott Royal Palms Red season in 2012 for $1600 (including closing costs) and sold it back to Marriott early this year for $3700...)

Great buy. Depending on when you plan on going there, I think that is a 2BR worth like 7k points. Although enrollment of interval is like $300/interval.

As I say, buy for nothing, and treat purchase price like a sunk cost.
 
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