New Bern, NC, may not have made CNN/Money's best-and-least-expensive-towns-near-water list, but the folks who live in the community of Taberna would feel differently.

    Over the weekend, friends Marian Schaffer and Terry Molnar at the Southern Way of Life web site posted an item about CNN/Money's latest "best of" lists, this time for Baby Boomers who dream of living near water and don't want to break the bank in real estate and living expenses.  Among the six picks was Beaufort, SC., a charming town north of Savannah and near Hilton Head that is a favorite of many people who have walked its streets and decided to purchase property in one of the nearby communities.  But with all the lakes, rivers and coastline in the U.S., how could the editor's possibly pick just six?
    Terry put his own puzzlement this way: "What did surprise me was that only two communities in the entire southeast made the list; Beaufort, South Carolina and Dunedin, Florida..."   The other towns included Sequim, WA; St. Joseph, MI; Durango, CO; Marble Falls, TX.
    My assumption is that the editors, in the comfort of their own offices, and via the Internet, scoured accessible data bases to compare median housing prices for as many towns as they could (but certainly not all; no media outlet today has those kinds of resources).  But anyone who has ever walked the streets of St. Marys, GA, for example, might find it odd that it did not make the list, given its own historic and charming downtown, and its position on the coast a short ferry ride to famous Cumberland Island (think wild horses and the site of the late J.F. Kennedy Jr.'s wedding).  At $260,700 for the average house in St. Marys, according to Sperling's Best Places' web site, the Georgia town's prices are virtually the same as those in Beaufort and have actually depreciated less than the South Carolina town's prices during the current crisis.  Osprey Point, a LandMar development with a Mark McCumber golf course, is just a few miles from St. Marys and a good place to stop if you are in the area.
    A river runs through Greenville, SC., which is certainly scaled a bit larger than Beaufort, but the median home price is about $90,000 less than in Beaufort.  With upscale restaurants, a fabulous cultural venue in the Peace Center and plenty of recreational activities in the area, including excellent golf, Greenville exerts a certain charm of its own.  And housing prices, again according to Sperling, have held up better than those in Beaufort. (Nearby Spartanburg is home to BMW, one of those successful "transplant" auto companies we have been reading about.)  Greenville's local private courses are highly rated and not overly expensive to join; I especially liked the Tom Fazio Thornblade Club in nearby Greer when I played it a few years ago.
    And what about New Bern, NC, an up and coming small metropolis where Pepsi was invented and where many former personnel of the military bases up and down the eastern seaboard have chosen to live out their years?  Once outside New Bern's historic district, you feel as if the modern world has closed in on you, but if you have ever driven from Beaufort the few miles to Hilton Head, you have a good chance of being stuck in stop and go traffic.  Just outside of New Bern, the golf community of Taberna offers reasonably priced homes and a sporty golf course that weaves through the community.
    The CNN/Money list isn't wrong; it is just way too short and, therefore, meaningless.  There are plenty of other resources on the web that are more complete and will help you make better decisions about what towns might suit your own lifestyle considerations.  For example, try SmallTownGems, where Bill Durell and his wife post dozens of photos and their honest observations about charming places they actually visit.  I like the site because Bill does not shrink from criticizing towns that don't live up to his high standards.
    Each of us has our own standards and lifestyle considerations, including the kinds of golf courses we might want to play in retirement or near our vacation homes.  And with prices dropping across the land, some of us may be looking for a match between our lifestyle criteria and a place to live.  If you are in that category, let me know, and I will scan all the best sources of information and put together some ideas for you.  As always, there is no cost or obligation for this service.

    Scores of Bernard Madoff's clients are asking themselves today how they could have trusted the former wunderkind with their collective billions of dollars (see Friday's article below).  These were not only wealthy but also sophisticated investors, among them Fred Wilpon, the owner of the New YorkMets baseball club and others well known in the upper reaches of society in New York, Florida, Minneapolis and other cities.  For some of them, it may be too late to learn from their own mistakes, given the catastrophic losses they have suffered, including the overnight bankruptcy of their investment firms.  But those of us fortunate not to have been burned that badly can benefit by the lessons of such pyramid schemes.
    Most golf community developments are successful.  Of course, at a time of ascending real estate prices, virtually all of them were successful.  But now, as the landscape literally (and figuratively) changes, we see more and more of these communities in trouble, especially those opened in the last year or two.  Their problems remind us that, in essence, each of them is built on something of a pyramid.
    In its simplest terms, Madoff's illusion started when he engaged a group of initial investors to put up $17 billion, with the promise of consistent, above-average returns.  Because of the prominence of those early investors, and the promises made by the respected Madoff, other investors quickly joined in.  Madoff, it appears, used the second-stage investments to help pay the promised returns to his initial investors.  Word of his performance grew and he took on more investors, all the while sharing few details with his adoring followers; and he used those new dollars to pay both the first- and second-stage investors.  You can see where this was going; the bottom of the pyramid kept growing and feeding those above.  That was all well and good for the earliest investors, and the illusion could have been extended forever, at least theoretically, if the worsening economy had not turned Madoff's investors into nervous nellies.  They called for their money (reportedly a total of $7 billion), Madoff couldn't cover, he confessed the illusion to his sons, and they turned him in (sounds almost Shakespearean in a way).
    Of necessity, a golf community is built on a similar pyramid.  A developer borrows money from one or more lending institutions -- like Bernard Madoff's earliest investors -- on the basis of plans to sell home sites and build homes.  Those bank loans help the developer prepare the land and, perhaps, set up a sales office, hire staff, create plans for the on-site amenities and hire a golf architect.  In many cases, the developer plans to also build the golf course early as a way to encourage purchases of property ("dirt," as developers refer to home sites).  All this is done with an eye to engaging additional "investors."
    The bank loans support these early expenses, but the developer must sell properties to continue to build the amenities, such as a community center, clubhouse, pools, tennis courts, fitness centers, a marina, maybe even the barn and stables at an equestrian center...and to pay for all the equipment necessary to outfit these.  The pressure is on to sell dirt to continue to fund the amenities (and to begin to pay off the bank loans).  Trouble begins when a community can't sell enough properties to build the amenities on schedule.  Postponing amenities begins to make property owners nervous and savvy potential buyers wary.  When a developer is forced to let things slide a bit, the word gets out, property sales slow down, some property owners unload their lots, and a downward spiral begins.  In some cases, the developer cuts prices, which immediately depreciates the early buyers' properties (and depreciates their feelings about the developer) and adds to an odor of desperation hanging over the development.  This is all to say it is important for a developer to get the amenities in as soon as possible.  
    In the worst case, you get a death spiral, as at Grey Rock, a mountain community in North Carolina that not only never built its promised amenities but also found a way to sell more than 400 home sites over a couple of years to people who never built on a single lot (the developers themselves built one of those Southern Living showcase houses to help sell a few properties).  That is a clear signal that these were mostly speculators trying to catch a continuing up-tick in an irrationally exuberant real estate market.  One day, Grey Rock's developers just picked up stakes, left the site (and a few of their other holdings in similar shape) and declared Chapter 11.
    So what can we learn about the Madoff debacle and the lesson of Grey Rock when shopping for a golf community property?   Madoff promised consistent returns, no matter the environment, and over years - including the first year of the now official recession - he did just that.  That performance, of course, was too good to be true.  A developer is selling you the promise of a completed community, not just a planned one, and there are some tough questions to be asked about schedules and funding and the impact of the current economy on performance to determine if the promises are realistic.
    It is good to know something about your fellow investors in a community.  Are they speculators or serious about building a home there?  You don't want to be one of the few property owners interested in living in the community.  That is not only bad from an investment standpoint, but ultimately not too healthy for your social life.  If a community has been overrun with speculators, you will probably notice it by the paucity of homes built and the lack of amenities, a deadly combination.  Steer clear, no matter how good the deal seems.
    Look for promised amenities at least under construction or, better yet, completed and being used.  Check with the homeowners association to determine the costs of running and maintaining the amenities and the history of dues increases.  Remember that developers subsidize the amenities before they turn them over to the residents; if you buy in before the hand over, you and your fellow residents might be in for a bit of sticker shock.
    In the current environment, there are great bargains in new homes but also great bargains in re-sales that just might fill the bill for you.  All things being equal, if I had a choice between a new house at $400,000 in a community with amenities still to be built, and a $500,000 home that is six years old but in a fully built-out community, I would likely give the nod to the latter on the basis of lower risk.  Of course, that assumes you are buying a place to live in rather than as an investment.  If you choose to make a pure investment in real estate in the current environment, all I can provide you are my best wishes.