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Re: Rent or Buy (by Barbara F.):

peterp151 wrote:

This is a great time to buy. Period. Exccept maybe if you already own too many timeshares.

Mark my words. Timeshares are a bit like bonds, and a bit like cars. We all know how they are like cars, the moment you buy one direct it loses 30-80% of its value. But do you understand how timeshares are like bonds?

The purchase price of a bond is, among other things, affected by current interest rates relative to the rate the bond offers, and economic conditions of both the economy and the specific condition of the entity which offered the bond. - When general interest rates rise the price of the bond must fall so the effective interest rate paid to the owner is similar to current interest rates. Opposite when general interest rates fall. - When the economy becomes worse or better, this will also affect the price of the bond. US Treasuries for example are considered a safe haven and thus the price will rise in times of uncertanty whereas many corporate bonds can fall due to the same reasons since investors worry the corporation might not be able to meet its obligations. - The health of the specific entity which sold the bonds will likewise affect the bond price.

So how are timeshares like bonds? - The annual maintenance you pay (and special assessments) affects the value of a timeshare sort of like interest rate changes. What is your annual maintenance compared to though? I feel it's comparable to hotel and resort rates, but it is also comparable to the price owners receive for renting their units. Currently maintenance has been rising while hotel rates and owner rental rates have been falling. Thus, timeshares are worth less. In the next three years we will see lodging rates rise again and thus the value of our timeshares will increase (but see the other two factors). - We've all seen the condition of the economy, and I'm pretty certain we can agree buyers of resale timeshares are hammering for lower bargains now more than ever. And it's unfortunate that owners feed the reduction of timeshare value by helping others find bargains on auction sites and other super discount opportunities. But that is the nature of the beast. As the economy imporves, less owners will feel the need to sell and more people will want to buy more resale timeshares. Generally speaking this will cause many timeshares to rise in value (but see the next factor). - Finally we come to a very important factor. The specific condition and desirability of a unit, and how you are allowed to use the unit, and the condition of the resort or management. Even if annual maintenance fell and rental rates increased two or four fold, this last factor can still render a timeshare basically worthless. I feel the higher quality resorts will see value increases in the years to come and on a case by case basis many other resorts with desirable weeks or points systems as well.

I own too many timeshares, so it's a bit difficult for me to show I'm buying. But as I sell off my less desireable units and free myself fom the annual fees I'm buying higher end units because they are a bargain right now. And as the economy imporoves and rental rates increase I'll be glad I did it. You might be able to wait another year. I'm not buying all out right now. All I'm saying is do not be among the people who didn't buy, and five years from now end up realizing you could have bought now for thousands less (I'm talking abought the Marriott and SVO and other higher end resorts).