- Oct 13, 2021
- Reaction score
- Wilson County, Texas
- Resorts Owned
- HGVC: 41,520 points - Coylumbridge, Flamingo, Elara, Trump, 2x Boulevard
We were also told that Hawaii may have better resale value in the future, but who knows if that is true.
Not true at all. The only resorts that could potentially have a better resale value in the future are 2 BRs (or larger) in ski resorts with Christmas/NYE fixed weeks, but it would take decades before the market value catches up with the overinflated retail price it's sold for. If you're paying a 3x premium for going retail, and assuming an average annual appreciation of 5%, that's 22 years to catch up. As of year 23, you'd technically sell for more than you paid, but don't forget about the inflation. At an average inflation rate of ~2.5%, that money is worth only 57% of what it was originally worth. So in reality, you're still far away from a goal of "better resale value". Your 5% appreciation in real estate must now catch up with the 2.5% inflation. Another 20 years before it breaks even.
x = resale value appreciation rate (assuming 1.05)
y = average inflation rate (assuming 1.025)
z = average appreciation without inflation (1.05 - 0.025 = 1.025)
r = resale market value
3r = retail price (assuming 3x the price of resale)
b = number of years to break even (the point after which "better resale value in the future" is true)
3r = rz^b
b = ln(3) / ln(z)
So, as expected, the resale value is eliminated from the equation.
b = ln(3) / ln(1.025) = 44.5 years.
It will take 44.5 years to break even. After that point, you will start realizing the promise of "better resale value in the future", at a 2.5% rate every year.
Now, be aware I assumed a very conservative 3x premium on paying a retail price. It's probably closer to 5x. ln(5) / ln(1.025) = 65 years, if it's 5x premium.
If you're interested in resale values, LEGO sets are a better investment, with an average appreciation value of 11% per year. The buy-in cost is your first year's appreciation (it will be spent on sales tax), year two and beyond is pure appreciation.