Depending on the quality of your instructor/school/class/textbook/workshe
With Climate Change a really un-ignorable reality, and a lot of diagrams a la those in _An Inconvenient Truth_ finally appearing in somewhat modified form even from the Bush administration (there's a shocker), it's increasingly apparent that there's a real future in jokes about underwater real estate in Florida. There's also a real _present_ in jokes about "underwater" real estate in Florida, and I could expend several paragraphs in how many water related words appear in finance-speak, and why, precisely, that might be (never mind liquidity, what about "bank"? But we all know that humans have civilization because they figured out how to move water around and the big world empires have always been about moving water around so it's not like this is even particularly interesting any more).
Real Estate really sucks in Florida now, and has for several years. But as bad as it is to be in a house that you owe more on than you can get out of it in a sale, consider the poor people who are in condos where other people have been foreclosed upon. The condo building _still_ needs to be maintained, which means that all those non-dues-paying units (and we're talking a significant percentage of any given tower at this point, and a significant chunk of the towers in general) have to be covered by large assessments on the remaining owners. That pushes some of them into bankruptcy, further aggravating the problem. It does not help when needed maintenance (like, fixing a roof leak) isn't done because there's no money for it, and the value of the property decreases etc. think water, drain, etc.
Let's go back to our little graph:
DVC -> TimeShare Exchange (think Interval International, which DVC gets you access to for a fee) -> TimeShare -> Condo -> [Building -> Land w/services ->] Land
I've added a couple of levels.
Let's say you're driving around. Somewhere. And you see a sign: so many acres for sale for so many dollars (total or per acre or both). Wow! Great deal!
If it's completely undeveloped land, and you're comparing it to something that's got a house on it with power and sewage and water and whathave you, you are not comparing the same thing at all. Each step costs money: getting a road in, getting a power line in, getting a gas line in, getting city water in, hooking up to municipal waste, etc. Each of these things you don't do will require an equivalent service on site. No gas line? That'll be a truck arriving to fill your tank. No sewage? That'll be a septic tank you have pumped every couple of years. No city water? That's a well that you need to drill. (No power? Solar panels, windmill and everything you can to cut your usage plus a generator to make up the difference if any remains off that tank you are having deliveries made to.) In rural New Hampshire ("live free or die"), you may be "free" of services, but it ain't cheap unless you want to live with cold water in a cold house heated by a wood stove you cut down from your own wood lot. Which had better be substantial. And consider the work: that ain't cheap or free.
Further, there should be a further step in my path for subdivision. The legal process of splitting up a parcel of land varies by region (and Florida made it Real Easy, at least for a while there) and is intricately involved with what you are then allowed to do with that parcel -- also, not free or cheap.
But let's say you do buy that land, and figure out you were a chump and selling it will get you .50 on the dollar for what you paid. Poor you. But you can get a lot more than you paid for it if you subdivide and get permits, so you do. And then that market tanks on you and again, you're looking at .50 on the dollar (or worse) for your total-in. Poor you. But still, unless you're operating on a Grand Scale, this is all chump change compared to the next few stages, even for single houses.
Take that subdivided, permitted land and put services on it. We're now talking some money here. Build housing on it. Even more. Do all the paperwork to create a condo association. Still more. Market the condos. Etc. Every step in this process is more legally intensive, costs more money, and requires a bigger payoff just to break even, never mind turn a profit. Let's say the scale is large enough to justify permanent management of the resulting building. Permanent marketing of the association. Now we're talking timeshare.
No wonder Disney put a drop-dead date in the deeds. Worry about timeshares that _don't_.
If you sold the "units" (whatever the hell that might mean) for what they truly cost in terms of endowing their future expenses in perpetuity, _no one_ would buy them. Only a tiny fraction of the population can afford to be in an endowed burial ground and really most of what's involved there is _mowing_, with a lot of edging, some fertilizer, and so forth, and maintaining a decent fence and a lockable gate that closes at night along with some tiny number of guards. "Units" in timeshares, just like units in condos (or "units" in co-ops, which I have been carefully avoiding in this discussion, even tho in a lot of ways they are a better comp for DVC and timeshare than a pure condo) have annual dues.
DVC annual dues vary by property (which actually kind of makes sense) but run around $5/point currently; they have gone up a few percent annually since the inception of DVC (as has the cost per/point to buy in, and the cost to rent a unit in a DVC property through Disney when the owners are not using it, or the cost to rent a room in a Disney property elsewhere at WDW).
If Disney decides they can afford to support the resale market, but finds they are sitting on a lot of unsold points in existing resorts, will they raise the dues of the remaining owners so they aren't on the hook for them?
If Disney stopped supporting the resale market, and this stuff started wending its way through bankruptcy, foreclosure, etc. proceedings, what would Disney do to raise the maintenance money on these properties?
Would they cut access to IntervalInternational as a savings measure? Would IntervalInternational cut them because there's no property to trade into anymore?
Obviously, if WDW is underwater, destroyed by hurricanes, etc., there's a problem. It's a problem that's relatively easy to anticipate, unpleasant to think about, but I don't know that anyone would feel that Disney had somehow screwed them if this happened. How are DVC owners going to feel if one of these other scenarios happens? Who is thinking about this?
Do they have a plan?