Golf Club Communities Experience Growing Demand

The re-emerging popularity of golf as a socially distanced activity amid the global pandemic has played a role in the increased interest in residential golf communities, as has safety, security and living in a controlled environment. Membership requirements continue to vary widely.

Residential golf community homes are back on buyers’ radars again after years of sluggish sales and stagnating prices, Realty Biz News reported. And the Wall Street Journal said that real estate professionals have reported a big jump in demand for homes in golfing communities since the coronavirus pandemic began.

It’s not just the golf that buyers are being drawn to, Realty Biz News reported, but also the wide open outdoor green spaces and the potential they have for socializing that could emerge once the pandemic subsides.

Despite the downward trend following massive development in the 1980s and 1990s, golf is reemerging as one of few activities people can partake in outside while staying socially distant from others, Realty Biz News reported. Americans say they played 10 million more rounds of golf in August than they did in the same month last year, marking a 20.6% jump in activity, according to a Golf Datatech and National Golf Foundation report cited by the Journal.

The paper stated that sales of golf community homes are rising too, Realty Biz News reported. The Cliffs, made up of seven residential golf communities in the Carolinas, saw sales volume increase by 161% in the third quarter compared to one year ago. In Scottsdale, Ariz., the Desert Mountain golf club community has seen its number of homes under contract double since September 1 compared to last year. And in Jupiter, Fla., Admirals Cove reported a 54% jump in home sales compared to last year.

Jupiter-based real estate agent Jeff Lichtenstein told the Journal that he believes buyers are attracted to the safety precautions being taken at golf clubs, as well as the outdoor activities and exercise classes they offer. Other perks include clubhouse meals delivered direct to your door, he said.

“There’s a lot of amenities in a pandemic that you never see outside of there,” Lichtenstein told the Journal.

But a golf club membership isn’t a given at these communities and sometimes comes with hefty fees, Kiplinger’s Personal Finance reported. It pays to understand just what exactly you’re getting. Some golf courses may be owned by the community, while others may operate as an entirely independent business.

Golf club membership scenarios run the gamut, said Cathy Harbin, President of OnCourse Operations, a golf management company based in Paris, Texas.

“It can be a developer owns the club and pays your membership for you when you buy a home lot or, through a promotion, they buy your initiation fee and the first few years of your membership,” said Harbin, a former Vice President of Golf for ClubCorp. “Or it can even be an optional situation, where you are offered a discount if you want to buy a membership. Of course, it can just be you buy the home separately, and the membership doesn’t have anything to do with your purchase.”

At Desert Highlands in Scottsdale, Ariz., every homeowner must become a club member, Joan Sykora, Director of Sales and Member Relations, told Kiplinger’s Personal Finance. That membership cost is a $75,000 initiation fee, and monthly HOA dues are $1,325.

At Ridgeview Ranch in Plano, Texas, where the community’s golf club is public, members get unlimited range balls and discounts on rounds of golf at certain hours—with the amount of times expanding depending on the monthly membership fees, $49.95 or $69.95, Kiplinger’s Personal Finance reported. There’s no initiation fee and the HOA fee is a semiannual $254 with an extra $107 for one community neighborhood. On the downside, crowded play is more likely at a public club, and the courses may not be as challenging as a private club’s.

Still, membership fees may be the least concern if the golf club has financial difficulties, Kiplinger’s Personal Finance reported. When the Sanctuary Golf Club in Beaufort, S.C., shuttered its doors in January 2019 and went into foreclosure, homeowners in the nearby Cat Island community had reason to fear the worst. Home values for communities with shuttered golf clubs can fall by more than 20% in an average economy, said Jeff Pinckney, a Beaufort-based part-time commercial realtor.

Cat Island residents were lucky because although the golf club was closed for about a year, it eventually found a new buyer and has since partially reopened, he told Kiplinger’s Personal Finance. As a result, home prices weren’t as affected.

Realtor Susan Akagi of Lakefront Living, On the Lake Realty, in Loudon, Tenn., told Kiplinger’s Personal Finance prospective buyers can get a better idea of how a community golf club is doing by talking to the club’s chief financial officer. A golf course that’s been around a long time often “gives a greater sense of stability,” she added. Plus, most communities also include other amenities for family members who don’t play golf, which can help real estate values if something happens to the golf club.

Golf Life Navigators (GLN) has found that 64% of prospective Sun Belt golf buyers would now like to live inside the gates of their future golf community—up 13% since 2019.

Per GLN’s data and past trend reports prior to 2020, only 51% of golf buyers were eyeing real estate in the gates of their future golf club. In a recent study of prospective member buying trends, GLN officials discovered a number of trends occurring in the marketplace for private club memberships in the Sun Belt. The most significant trend, “consumer demand to live inside a gated golf community.”

“For the past 36 months, we have been watching this statistic very closely,” says Jason Becker, CEO of Golf Life Navigators. “Understanding the dynamics of private club communities, we know capture rate of new golf member vs. community home buyer is extremely important to the long-term health of the club. To see this dramatic shift in demand has us optimistic the trend will last well into 2021.”

In addition to the survey data, GLN was also able to ascertain the primary reason(s) for the change in sentiment from future buyers to the marketplace. Safety, security, and living in a controlled environment were provided as primary motivations for consumers’ search criteria going forward.