Keeping one stroke ahead of the competition, many builders are not reporting ‘under par’ sales when it comes to building homes on golf courses. Even though according to the National Golf Foundation, more than 150 golf courses went offline last year.
The information appeared in Builder Magazine.
However, many people still want to live this lifestyle and many builders are building townhouses, facilities and homes on the properties.
In New Jersey, Burris Construction stepped forward last month with a plan to use the long-vacant 50-acre Woodbury Country Club for the construction of three healthcare centers and 20 houses. On March 12, the golf course in Montgomery Village, Md., which went into bankruptcy last August, was acquired by Monument Realty, which intends to keep the 147-acre course open for a while longer but eventually transform that real estate to include open space as well as townhouses and multifamily residences.
Monument said it would at least three years to rezone and redesign the lots for redevelopment.
Typically, golf course communities historically have been gold for developers and builders “that realized they could charge a 10-25% premium for houses near courses,” says Ed McMahon, senior resident fellow for the Urban Land Institute. Surveys also show that the majority of people who buy homes on or near courses don’t play golf. (As many as 60%, by McMahon’s reckoning.) Demand for these homes “has more to do with the green space; that’s where the premium comes from.”
Golf-course development accelerated in the late 1990s and early 2000s. But the number of players did not: McMahon cites a Wall Street Journal article of a few years back, which found that while about three million people take up golf each year, just as many stop playing for reasons of cost, health, or time. NGF has estimated that there needs to be 4,000 golfers within a 10-mile radius to improve the likelihood of a golf course’s financial success.
“This has been a natural shakeout, like what happened in retail,” which also got overbuilt, says McMahon, who points specifically to Myrtle Beach, S.C., which reputably had more golf courses than any city in the U.S. at one time, but has seen courses close at a rate of 10% per year.
McMahon says he’s also seeing more communities popping up with vineyards, orchards, even farmland “that have the lifestyle value that golf once did.”
In the Hilton Head, S.C., market, Reed Group, which had developed several golf-course communities over the years, spent $1.2 million in 2004 and 2005 getting a golf course permitted. But then, its CEO John Reed recalls, the company had a change of heart and decided instead to develop the 955-acre property around a 165-acre lake. That Bluffton, S.C., community, called Hampton Lakes, has sold 650 of its planned 900 homes, with prices ranging from $300,000 to $1.5 million. In 2008, NAHB recognized Hampton Lakes as a “Best Community in America.”
Reed, who has been developing land for 40 years, tells Builder that this kind of reconsidered development “had to happen. We simply built too many golf courses in this country. And then there was the economic crash.” More important to Reed Group’s decision, though, was its conclusion that baby boomers are simply less interested than their parents in golf and country club living. That’s especially true, says Reed, of women “who make 96% of the home-buying decisions. They are looking for an inclusive, multigenerational, casual, and sustainable place to live.”
Reed Group will probably develop golf courses in the future. But, says Reed, “they won’t be the centerpiece of our communities anymore.”
Builders whose portfolios include golf course communities aren’t blind to current realities, and don’t dispute the statistics or trends. But they insist that golf remains a weapon in their marketing arsenals to lure buyers looking for a certain lifestyle.