Time shares are billed as a way to own a little slice of paradise.
But in this economy, some owners are practically willing to give away theirs.
Many time shares are on the market for just $1,000, as owners try to get out of paying annual maintenance fees. That’s good for buyers; tough for those trying to sell.
Rene LeBreton has been trying to sell one of his mother’s time-share weeks in Florida for $3,900. It’s only been on the market for a month, but he’s surprised he hasn’t gotten any calls yet.
“I don’t know if I was expecting this,” said LeBreton, of New Orleans. “I guess my expectation is I would’ve had two to three calls by now.”
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Time shares look like condos, but typically the units are divvied up and sold in 51 one-week intervals. Many resorts also have a “points” system that allows owners to exchange points for stays at properties, airfare and food.
Florida’s time-share industry surged in the mid-2000s, with many new properties in Central Florida and the Florida Panhandle. But since then it’s been whacked by the same collapse affecting homes, condominiums and office buildings.
Since September, two large time-share resort companies in the Orlando area, Tempus Resorts International and Island One Inc., have filed for bankruptcy. Tempus operates a 717-unit time-share and golf resort in Celebration called Mystic Dunes. Island One manages nine time-share resorts around Florida and the U.S. Virgin Islands.
Part of the problem is that lenders such as Textron Financial Corp. and GMAC Commercial Finance have pulled out of the time-share industry, causing a cash crunch for time-share companies, said Elizabeth Green, an Orlando bankruptcy attorney who represents both companies.
Foreclosures, meanwhile, have soared as people have been unable to pay their yearly maintenance fees or simply stopped trying and let resort owners foreclose.
Data on recent foreclosure rates are hard to find, but industry insiders acknowledge there’s been a surge in time-share developers forced to take back units. Foreclosure rates at any given time-share property range from 10 to 30 percent, said Kevin Riley, an accountant who works with time-share companies.
While developers try to sell off their own units, individuals are flooding the market with units for sale, posting ads on Craigslist, Redweek.com and Timesharing Today or hiring brokers.
LeBreton listed one of his mother’s three time-share weeks at Longboat Key’s Veranda Beach Club for $3,900. But considering he hasn’t gotten a single call, he said he may let it go for as little as $2,500.
His mother, now 82, doesn’t want to keep paying the $800 annual maintenance fee on each of her time-share weeks, which she originally bought for $6,000 each. Plus, the travel from Louisiana to Florida has become difficult.
LeBreton’s brother sold off a penthouse at the Veranda Beach Club for $12,000, about three-quarters of its original price.
Low prices aren’t necessarily new in the time-share resale market. Time shares are more like cars than condominiums and houses, because they lose value once someone buys them.
Buying a week at a new time share often will set someone back $20,000 or more, with 50 percent of a developer’s original cost going toward sales and marketing, said Jon Peet, who helps regulate time shares for the Florida Department of Business and Professional Regulation. A family trying to unload its time share after a few years won’t recoup that cost.
Even so, now is especially tough.
Sale prices for time-share units on
Redweek.com, an industry marketplace, are running about 25 percent less than in 2008, a spokeswoman said. Most people are seeking $1,000 to $5,000 for their time-share weeks, with the median price about $3,000.
Carrie Stinchcomb, an Orlando time-share broker, sees most sellers shooting for as little as $1,000 or $2,000. In the past, she was able to charge a $1,500 commission for selling a time share, but recently she’s had to drop that to as low as $500.
“When the economy hit like it did, there are very few buyers out there,” she said. “I’m getting bombarded by sellers.”
Stinchcomb estimates she has 10,000 time shares listed.
Elsewhere, the time-share industry never got as overbuilt as Central Florida and wasn’t hit as hard, said Dennis DiTinno, who runs a resort management company called Liberte Management Group in Pinellas County, along the Gulf coast.
Twenty-seven time-share properties line the Pinellas County coast, compared with just one in Pasco and none in Hillsborough. Nearly all were built in the 1980s, and while they offer pools, gulf views and meeting rooms, they aren’t like the massive golf course and sauna resorts of Celebration and Orlando.
DiTinno insists the delinquency rate on maintenance fees at his nine Pinellas time-share properties is only about 4 percent, even if it’s well into double digits elsewhere in Florida. And, while more people are looking to sell, the local market isn’t as flooded, DiTinno said.
The area time-share industry is ripe for a comeback, said DiTinno, who’s in talks to help develop a 38-unit time-share project near Clearwater Beach and sees potential for time shares on the Pinellas beaches.
“We are still the unknown gem,” he said.
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Industry overview
There were 1,548 time-share resorts in the U.S. in 2009, representing about 170,200 units, for an average resort size of 110 units. Of these, 6 percent were studio units; 23 percent were one-bedrooms; 66 percent were two-bedrooms; and 6 percent, three bedrooms or more. Florida, California and South Carolina have the most resorts, comprising 39 percent of the market.
Source: American Resort Development Association