There has been much discussion lately about the drop in popularity of golf clubs, and its implications for the South Florida real estate market.
The number of golf courses has declined steadily since 2006, with hundreds more closing each year than opening. The majority of these are public courses, as local governments cannot afford to keep losing taxpayers’ money to maintain their courses.
The issue is basically one of supply and demand. The attrition rate is increasing as fewer people are taking up the sport. Golf is an expensive activity with a very steep learning curve.
South Florida is home to many mandatory membership country clubs. Some are more financially healthy than others. Most were built in the 1980’s and 1990’s during golf’s heydey. In the past the memberships were primarily equity, with that equity being returned when members left and sold their memberships, most likely to the purchaser of their home who is required to join. Now the majority of clubs are charging a non-refundable membership fee in addition to the equity membership. Many have rebuilt their facilities to add amenities that will attract non-golfers as well, with resort style pools, gourmet dining, spa facilities, tennis, and other sports. We see that in some higher-end country clubs, sales are robust as the buyers can afford the $100,000+ buy-in, the steep annual dues of $30,000+ a year, and the multi-million dollar homes. These communities are constantly reinvesting into their courses and infrastructure in order to remain at the top, thus preserving their members’ home values. However, in the average club, it is tougher. Many clubs have years worth of inventory, especially in the lower price ranges, where buyers of those homes cannot afford the steep prices of membership. On average, homes in mandatory clubs take three times the number of days to sell, and the ratio of list price to sale price is 5% less than in non-membership communities. The absorption rate (the number of months it will take to sell the current inventory of active listings at the current rate of sales) is 5.4 months for non-membership listings, versus a whopping 17 months for mandatory membership homes.
This trend showing a decline in golf participation and consequently golf course closings, has created a potential opportunity for builders. With a shortage of available land to build new housing, developers are looking to golf courses as a solution to the problem.
In Boca Raton, there are proposals for residential development on golf courses at the Municipal Golf Course just west of the Turnpike and at Ocean Breeze Golf Course in East Boca adjacent to Boca Teeca. Delray Beach residents have received a proposal to build on a former golf course at Villages of Oriole. And up in Lake Worth, the developer of The Bridges and Valencia communities is buying golf course land at the Fountains to build almost 500 homes. There are similar developments in Hollywood and elsewhere in the tri-county region. If it weren’t for deed restrictions preventing development on the courses, we would probably see a lot more of this type of development.
It will be interesting to see what happens in the next few years with some of these assets. Boca Expert Realty will be keeping a close watch on these developments and will be ready to address any questions you might have regarding your golf club property, and assist you in the sale of your home.
Gloria Singer is the Broker of Boca Expert Realty, a boutique Boca Raton real estate company with a focus on professional service and an unparalleled customer experience. Our select agents are amongst the top performing professionals in the field. Visit www.BocaExpert.com for information on Boca Raton, Delray Beach and Highland Beach real estate and to connect with an expert in the local market.