Obviously resale values are going to be negatively impacted when (if) you remove commercial renting—you’re reducing the demand and absolute buying power in the marketplace while also adding contract supply.
not necessarily - the same contracts are being sold. Just that loaded ones are more likely to find their way to the resale market rather than being bought by a flipper, stripped, and put on the market as stripped until [year+1]
Commercial renter/strip and flip:
1. commercial renter buys loaded (200 pt) contract at instant sale price of P-20 ($20 pp discount to what they'd sell for on the resale market). This might be worth it to a seller who doesn't want to deal with offers, negotiations, ROFR, etc.
2. Commercial renter takes 3 years (2023 banked, 2024, 2025 borrowed) of points and makes 600 points worth of reservations charging $20pp = $12,000 to the CR. now the effective cost to the CR of this contract is P-80 because they saved $4000 at the initial purchase and netted another $12,000 in rental $$.
3. Commercial renter puts stripped contract on the market for P (price per point)
Say P = $150 (average price per point for that resort) and assume no transaction costs, time value of $:
The original seller gets = $130 x 200 =
26,000
CR pays 26,000 but:
Gets $12,000 in rental $
Puts on the market as a stripped contract at P. Even with heavy negotiating, say they sell at $140, that's $14,000 in profit! (plus we know even the stripped contracts sell for more than the "instant sale" price)
A savvy seller could strip their own contract, say renting 400 points at $18pp and get $7,200, and then sell their contract for $150pp, or even at $140 pp they'd get 28,000, for a total of
$35,200.
Or the seller could sell their fully loaded contract at $160 even though it could sell for more and is worth more (because the market undervalues loaded contracts), they'd get
$32,000. The new buyer has a choice of renting out the banked points because they can't use them - on this board, $15 pp would go super fast, and the seller will now have paid $145 pp ($3000) for those points (but easily passed ROFR at $160 pp)
As individual owners, I don't see how/why we are squabbling over the "morality" and ethics of walking reservations when individual owners on both sides of a resale transaction would benefit from stripping/flipping being reduced.
More loaded contracts for sale, more options for buyers and sellers. More variety to choose from.