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June 10th, 2008

DVC 4: Another crack at valuation

Let's say we run with this treat-it-like-real-real-estate thing. What would it cost to _live_ in a DVC property? Year round? What would it cost to "buy" one (recognizing that you can't buy in perpetuity since the deed has a date on it)?

Since I'm too lazy to actually compute this in detail, I pulled out one of the cheapest properties (AK), eyeballed the most expensive (Concierge level) of the 1 bedroom level and figured it would cost about 300 points a week (some of the year quite a bit less; some of the year quite a bit more). I know from looking at Wilderness Lodge (one of the more expensive ones) that the 1 bedroom range there is comparable. It would cost about 15-16K points, then, to stay there for a year.

If you paid full price for it, that would be between 1.5 and 2 million to buy. You could presumably do somewhat better in the resale market.

Your dues would vary by property, but $5 is towards the top end of the current dues range, so you'd be paying nearly $80K a year in dues (regardless of whether you bought "new" or resale).

For reference purposes, my dues for a 2 bedroom condo on Capital Hill in Seattle are < $400/month BUT this does not include everything that is included in DVC dues (for example, I have to pay property tax, an electrical bill, maid service if I wanted it, plus I had to furnish and decorate it and would have to keep those furnishings and decorations up to date, if something breaks, I have to hire a plumber or electrician or someone to fix it, etc. all of which is handled by someone other than the DVC "owner" at a DVC resort). Still, $6500 or so per month would buy a lot of property tax, electricity, maid service, furnishings, repair and refurb, etc. A _lot_ of etc.

In fact, looked at from the "live there" perspective, the purchase amount (tho substantial) is actually not totally insane -- the dues, by contrast, look a little nutty.

What are dues _typically_ in a $1-2 million condo? Boy, there's a question. Looking around online, I think you could safely say they'd exceed $1000/month, and might exceed $3000/month. But I sincerely doubt they'd run $6500 a month (on the other hand, they wouldn't include maid service, either. I don't think.).

I think it's safe to say that, as one might expect, Disney has Done the Math on this. The "dues" on the amount of points needed to vacation are low enough to fall within the noise of a middle-class+ budget (you could get some _nice_ time and space at DVC for 400 points a year, and if you figured those dues over the entire year, it'd be between $150 and $200 a month. Virtually everyone buying into DVC buys less than 400 points.). So you don't necessarily look at the dues as the place where the profit is.

And yet, I think that's _exactly_ where the money is.