767 Willamette Street ● Suite 307 ● Eugene, OR 97401 ● (541) 912-9436 ● info@ragatzassociates.com EXECUTIVE SUMMARY THE SHARED-OWNERSHIP RESORT REAL ESTATE INDUSTRY IN NORTH AMERICA: 2024 FRACTIONAL INTERESTS PRIVATE RESIDENCE CLUBS Introduction This document is an Executive Summary of a larger survey conducted by Ragatz Associates of the shared-ownership resort real estate industry in North America as of February 2024. Included in this overall sector of the resort real estate industry are two components: fractional interest projects and private residence clubs. Destination clubs are not included. This is because information received from the few remaining clubs has been questionable in terms of accuracy, as well as limited in scope. Fractional interest projects and private residence clubs are similar, in that both typically sell deeded ownership in shares of vacation homes, ranging from a 1/21 share with two weeks of annual use to a 1/4 share with three months of annual use. However, the two components vary in terms of price, quality of product and degree of services and amenities. Ragatz Associates simply assumes that product selling for less than $1,000 per square foot falls into the fractional interest category, and product selling for more than $1,000 per square foot falls into the private residence club category. A destination club typically sells 30-year memberships on a non-equity basis into a wide network of vacation homes in multiple locations. Some clubs are equity-based, however. The concept is further characterized by a refundability policy when members leave the club. And, some are rental clubs. Again, they are not included in the survey. The survey represents our 24 th annual edition. Once again, it is thought to be the most thorough and comprehensive survey conducted of the industry. Size of the Industry Some 333 fractional interest (FI) projects and private residence clubs (PRC) were identified in the survey. Of the 333 developments, 26 actually made some sales in 2023. The 26 FI and PRC projects are the primary focus of the survey. Included in the 333 developments are 66 percent in the United States, 16 percent in Canada, 10 percent in the Caribbean and eight percent in Mexico. The two states of Colorado and California contain 18 percent of all developments. Of the 26 active developments, 42 percent are fractional Ragatz Associates Executive Summary: The Shared Ownership Resort Real Estate Industry in North America 2024 [ 2 ] interest projects and 58 percent are private residence clubs. Most of the 307 inactive developments are older, sold-out fractional interest projects. There were 26 active projects making sales in 2023. Between 2022 and 2023 there were six new projects, four projects attaining sell-out, and four either stopping sales or converting to other uses. It is estimated that total sales volume in the fractional interest and private residence club industry in 2023 was about $580 million. This amount includes new closed sales, presales, and in- house resales. When looking at the two individual components, sales volumes were $55 million for fractional interest projects (nine percent) and $525 million for private residence clubs (91 percent). Some 42 percent of the 26 active projects were fractional interests, but they generated only nine percent of the total sales volume. Sales volume in 2023 was down slightly from $624 million in 2022. But, it was still the second highest in the past 14 years. During the 12 years between 2010 and 2020, the sales volume was quite consistent, ranging from $175 million in 2017 to $349 million in 2010, and averaging $234 million. These years were significantly down from the peak pre-recession years of 2007 ($1.7 billion) and 2008 ($1.2 billion). The first significant increase since those peak years was in 2021 at $495 million, and then bumping up to $624 million in 2022 and to $580 million in 2023. Shown below are industry sales volumes since the peak year of 2007. year sales volume (mil.) year sales volume (mil.) 2007 $1,687 2015 $190 2008 $1,175 2016 $217 2009 $665 2017 $175 2010 $349 2018 $184 2011 $331 2019 $198 2012 $267 2020 $179 2013 $261 2021 $495 2014 $197 2022 $624 2023 $580 In 2023, the average annual sales volume in the 26 active projects was $5.0 million for fractional interest projects and $35.0 million for private residence clubs. However, if excluding the top three private residence clubs, the average for that component would decline to $5.25 million. If excluding the top three selling fractional interest projects, the average for that component would drop to $1.4 million. Of the total 26 active projects, 23 percent had sales over $10 million, while 23 percent had sales of less than $1 million. Prices Prices in the shared-ownership industry range widely. For fractional interest projects, average prices include $180,950 per share, $29,350 per week (when dis-aggregating shares to an individual weekly basis), and $740 per square foot. Among private residence clubs, these averages are $861,500 per share, $100,100 per week, and $1,815 per square foot. Per week and per square foot prices tend to decrease as the size of the unit and share increase. In comparison with 2020, average prices increased by $175,000 per share (67.8 percent), and $17,250 per week (33.7 percent), and stayed the same per Ragatz Associates Executive Summary: The Shared Ownership Resort Real Estate Industry in North America 2024 [ 3 ] square foot. When compared to the peak year of 2007, per share prices have increased by 65 percent, per week prices by 46 percent and per square foot prices by 30 percent. Per square foot prices vary significantly by country, e.g., from $900 in Mexico, to $1,300 in the Caribbean, to $1,625 in the United States. They also are higher in ski communities and at developments offered by branded hotel companies. Annual maintenance fees average $13,000 per share, ranging from $6,450 among fractional interest projects to $18,500 among private residence clubs. On a per week basis, such averages are $915 and $3,525, respectively. Operating costs (including marketing, sales and general administration) were about the same as in recent years, at about 15 to 20 percent of the overall sales volume. Product costs were about 50 to 55 percent. Product Characteristics Upon completion, the average shared-ownership project will contain 33 units. Some 87 percent of the units are either two-bedrooms (25 percent), three-bedrooms (29 percent) or four-bedrooms (33 percent). Among all units, the average size is 1,835 square feet. There are at least nine different sizes of shares being sold. Most frequent sizes for fractional interest projects are 1/8s (55 percent). For private residence clubs they are in the 1/10 to 1/8 range (80 percent). On-site amenities and services are extensive in the industry, especially at the private residence club level. However, there was a continuing trend in 2023 (as in recent years) to have fewer on-site services in order to conserve on annual dues. At the same time, there was a trend to provide more owner benefits such as rental and resale programs, and external exchange. Future Trends It is felt that the shared-ownership components will continue to rebound in the future. Reasons include being a concept that is based on: (1) personal use rather than speculation; (2) being able to purchase only the amount of time that have vacations to use and discretionary income on which to spend; (3) lowering household spending habits and capabilities; (4) being hassle-free, i.e., “show up and enjoy;” and (5) the opportunity for flexibility and variety of use due to the external exchange process. Based on 50 years of experience in the resort real estate industry, we expect shared-ownership to once again be on a growth track as the national economy further improves, and as families seek locations to escape urban disamenities. The complete report is available for purchase from Ragatz Associates at www.ragatzassociates.com.