By M. Beddingfield
It’s all over the news. Resort properties are hurting as much as any business, maybe even more since they use their customer’s financing as a security to borrow money to build more vacation resorts. Big name companies in Florida are laying of up to one-third of their workforce. What does this mean for current timeshare owners?
This year has produced a record number of foreclosures. Owners are walking away from their responsibilities of paying yearly maintenance and mortgage fees. In many cases, they have little choice, it’s feed the kids or pay the fees and loans associated with the resort property.
The foreclosure effect works like a ripple within these types of communities. It affects each and every owner. The lost income from unpaid mortgages and maintenance fees has to be made up somewhere. With the companies feeling the pinch, it’s just good business for them to pass the debt to the consumer. This means that maintenance fees will be increasing as will any surcharges they can dream up.
One of the effects is the devaluing of the unit. The market prices were high when they bought and now the worth of their unit is often less than .25 cents on the dollar. While there are some investors snapping up cheap propery resort units, it’s nearly impossible to sell one and make any kind of profit. It’s more likely that an owner will have to pay hundreds of dollars to unload it in the form of listing fees and closing costs. And even then many owners are finding themselves bilked out of hard-earned cash by unscrupulous realtors and other scam artists.
There are charities that will accept timeshares. But these charities are becoming more discerning about which resort units they take for free. With so many people looking to get out of the burden of owning these properties, charities have found that they can pick and choose the best destinations and red weeks. And who can blame them for wanting to get the best deal they can get? They are doing a service to strapped owners by assuming ownership of a unit that is no longer wanted.
Many owners have been able to rent their units out to recoup some of the yearly costs. Renting is a viable but difficult option. Often it is more problem then solution.
As the economy continues to falter, fewer and fewer people will have the disposable income necessary to take a vacation. More owners will be forced into default and the already glutted market for cheap resort units will bottom out. When this happens, owners will find that the unit they purchased is worth pennies on the dollar. We’ve already seen this happening in some cases, especially online sales such as Ebay and Craigslist.
The only bright side may be that the economy will force the timeshare industry to examine it’s questionable sales techniques and change their target market. In an ideal world, resort property ownership would become the exclusive property of the rich and famous who can actually afford them, and the common man will learn to be content with family vacations that they don’t have to pay on for the rest of their life.