April 2023

Some people don’t appreciate Florida as a destination for retirees, despite its popularity. I have heard cynics say about the Sunshine State that, “People are dying to live there…literally.” But God’s waiting room, according to an assessment of longevity across the U.S., has one of the highest average age-at-death of all 50 states, and certainly the highest in the Southeast by a wide measure. That story and more in this month’s Home On The Course.


No Bust in Sight for Home Prices:
What Can Eager Buyers Do?

If you own a golf community home in a popular area, the Pandemic market has been good to you – and continues to be.  Despite some headlines that predicted significant price drops, home prices between January 2022 and this past January rose 5.5% nationwide, according to the experts at Corel Logic’s Home Price Insights report.  That same well-trusted report forecasts a 3.1% increase over the coming year.  More important for those seeking a golf home in the Sunbelt, especially the Southeast, price rises in the region will outstrip those nationally, with the forecast for the Miami area alone a whopping 17.3%.

No other areas I follow are predicted to rise by nearly that much, but neither are they poised to fall.  Baby Boomers continue their march to Sunbelt retirements, and employers are acceding to the wishes of their workers to dial it in remotely.  Those society-shifting trends continue to put pressure on real estate inventory levels (low) and prices (historically high in many locations).  In the Myrtle Beach metro, for example, the average home value rose this past January to almost $300,000, nearly 15% higher than the year before, according to Norada Real Estate Investments.  Zillow reported that sold homes in Myrtle Beach fetched, on average, about 97% of their list prices.  Sellers are holding many of the cards in Myrtle Beach and in other coastal Southeast areas.

Given that real estate landscape, what are active buyers supposed to do?  They have three options – buy an existing home, rent a condo or other style home, or buy a lot and build a dream home. (Note:  There is a fourth option, which I intend to explore in a future newsletter – staying put in a place with which you are familiar and comfortable.)  Each option has advantages and disadvantages; your lifestyle and goals will drive the proper decision for you.

Buy an Existing Home

Whether a single-family home or condo, owning has obvious advantages, especially for those with fairly longtime horizons (say, five years or more).  Real estate almost always appreciates over time unless, of course, you were unlucky enough to buy in the few years leading up to the 2008 housing recession.  Even then, for those with patience, most markets had recouped their losses by around 2011.

Single-family home ownership is “subsidized” by the government, which provides a deduction for up to $10,000 in property taxes. Given the typical property taxes in many popular areas of the Southeast, your home would need to be valued at more than an estimated $1 million for you not to be eligible for the full deduction.  That said, many of us own two homes, and our combined property taxes exceed the $10,000 limit.  Deductions for mortgage interest payments on your primary and second homes will be helpful, and tap out at a total $1 million (for joint/married filers).

Of course, potential appreciation of your home is another strong incentive to buy. Consider how much your primary home appreciated over the decades you owned it, assuming you lived in one place for a significant period of time.  However, many “lifestyle” experts advise that you should consider a house as shelter first, lifestyle support second, and investment a distinct third – an approach I have always taken.  House appreciation is a wonderful bonus, but should not be the driving point, especially in retirement when you want to lower your risk.

The benefits of long-term home ownership are undeniable, but what about the costs?  If you have a yard and are getting to the point that you can’t, or don’t want to, maintain the landscaping, you will pay for someone else to do it – and pay a substantial amount since there will be lots of retirees in your area fighting for the services of a limited number of lawn tenders.  Any repairs to your home – water heater and roof leaks, damage from storms – is on you. Oh yes, and homeowners’ insurance and flood insurance will be required if you live in a designated flood zone near the ocean, and homeowner association fees if you live in a developed community.

There is one other cost that most of us do not think about, and that is opportunity cost, or the strategy to take the money you might plow into a house and, instead, invest most of it in a safe place that generates steady income that you can use to rent a nice home – without biting too much into the principal.

Rent:  Let Someone Else Take the Risks

In that last example above, let’s say you sell your primary house for $700,000 and you will be downsizing to a home in the Southeast that is considerably less expensive than the one you sold.  And let’s consider you put aside $600,000 in cash to pay for a new golf community home and $100,000 in the bank.  Sure, you could take out a mortgage on the house, but in your seventh decade of life, is any significant debt what you really want to deal with – not to mention mowing lawns, picking up leaves and other garden detritus and paying for inevitable repairs?

Now consider you take the entire $700,000 from the sale and put it into some safe, interest-bearing account yielding, let’s say, 4.5%.  (This is a real current example from Fidelity’s Government Money Market Fund.)  That rate would provide $31,500 for you annually without any bite of the total principal.  Divide by 12 for a (rough) monthly yield and that’s $2,625.  As I write this, that almost pays for a nice three-bedroom, two-bath single-family home in the gated River Club golf community in Pawleys Island, SC, listed at $2,810 per month. The house comprises 2,300 square feet and its occupants will have access to a sporty 18-hole golf course, and an ocean beach club with tennis courts and walking trail.  And cable TV, internet and trash pickup are included.

The other major positive about renting is that you have time to decide if you like a community and area and, while in residence, look for a place to buy, if you are so inclined.  But beware the unexpected disadvantages of renting.  Your landlord can raise your rent at any time, making the budgeting process year to year a bit tenuous. Or, perhaps even worse, your landlord could decide to come back to live in the rental. The example above at the River Club is only for a six-month lease; that’s fine if you are looking to buy or build a home in the area, but if you are counting on a long-term lease of one or two years, you had better search for rentals with that contingency. 

Pay a Modest Surtax for Your Dream Home

There are still a few choice home sites for sale in many of the best golf communities in the Southeast, although the Pandemic market had the same effect on the sales of lots as it did on the sales of homes, with prices pushed up by demand.  Inventories have shrunk and prices have risen proportionately. 

Back in the good old days, less than a decade ago, the price to build your dream home was not any higher than a comparable already-built home.  That is because the price of “unimproved” land was a great bargain.  But not quite today.  You will pay an extra price to build a home precisely to your specifications; contributing partially to that price is the cost of the land, but the cost of the materials and labor to build has also risen substantially over recent years.  According to the National Association of Home Builders, a newly built home in May 2022 cost an average $34,000 more, or 7.5%, for land and construction than buying a comparably sized and outfitted existing house (based on an analysis of the median prices of homes sold in the U.S.).  Of course, there are regional differences in costs, and a client’s personal preferences and tastes will drive the price to build up or down.

Because of a shortage of labor owing, at least in part, to immigration policy, homes are taking months longer to build than in pre-Pandemic times.  That argues, perhaps, for a strategy that combines renting with an option to build.

The Bottom Line

If you loved the experience of owning a home during your working career, and you didn’t mind making minor repairs yourself and doing some gardening, then translating that experience into your initial retirement years should be smooth.  If, on the other hand, you cashed in from years of appreciation in your primary home and the interest on the amount you bank will pay for a nice rental apartment, then why not?  Your principal, at least for a few years, will pay for travel and other entertainments in your Golden Years.  And, finally, if you have never lived in a space designed to your own style of living, and if you have the money and the patience to do it, consider buying a lot and building your dream come true.  Whatever path you choose, enjoy the experience to the max. 

Larry Gavrich
Founder & Editor
Home On The Course, LLC

One Shining Moment:  Why Golf Can Make You Feel Like A Pro

I was a couple of months past my 16th birthday as I stood on the 7th tee of the 137-yard downhill par three at Valley View Golf Club in East Hanover, NJ.  As I recall, my handicap at the time, if I had kept one, would have been in the mid-teens.  I hit a 7 iron flush and watched it land 15 feet short and a little right of the hole.  It rolled into the cup without making a sound against the flagstick.

I write this not to brag; that was my one and only hole in one in 63 years of playing (although I left one hanging over the lip at a downhill par 3 in Minnesota in the 1980s).  But I want to make a point that no other golfer, alive or dead, amateur or professional, will ever do better on a par three than I did that day.  In that regard, Tiger Woods has nothing on me.  That possibility that we golfers, with just one swing, can be as good as any professional is why golf is the greatest game an amateur can play.

Let’s face it.  You and I will never be able to hit a rising fastball from Justin Verlander.  Or prevent Kevin Durant from a thunderous dunk over our heads.  Or prevent being deked out of our shorts by Odell Beckham.  But it is at least possible, with one swing, to do better than virtually every professional golfer will do in any tournament.  And those of us who birdie a par three or four will perform just as well as the best professionals have performed at Augusta National this week.

As you play your local muni or private club this week, swing with confidence because, for one shining moment, you could be as good as the very best players in the world. 


Pawleys Island damage after hurricane Ian

After Hurricane Ian devastated Ft. Myers and moved across Florida and into the Atlantic Ocean’s gulf stream, it landed in Pawleys Island, tearing up the wooden dike that separates the Pawleys Plantation’s two signature par 3s.  Fortunately, winds topped out at around 80 mph, but the storm surge from the ocean across the marsh pulled up docks, and even one boat, and deposited them across the golf course’s back nine. 

Rushing into the Eye of the Hurricane

When Hurricane Ian devastated Fort Myers Beach, real estate prices there had already reached historic highs.  The month before the hurricane, news reports indicated Fort Myers was the third most overvalued market in the nation, according to researchers at two Florida universities.  In the month after the hurricane leveled much of the Fort Myers area, prices rose another 21%.

Say what?  Did fools rush in where wiser men feared to tread?  Florida and its balmy winter temperatures, its lack of a state income tax and decades-long orientation toward retirees – e.g. bargain early bird dinners – have an almost narcotic attraction for seniors and, lately, younger persons as well, especially those who are now working remotely.  The land rush to Florida is on steroids.

Florida’s ocean and gulf coastline is second in length only to Alaska’s and 2 ½ times that of third place California.  Beaches have always attracted retirees, and Florida’s are the most popular of all – even if there is evidence that they are more and more susceptible to intense storms.  The threat, of course, drives up flood insurance rates and expands the flood zones to compel more and more homeowners there to take on insurance premiums.  But to those looking for property on or near the ocean or, in this case, the Gulf of Mexico, apparently no devastation or even a run-up in prices are too severe to miss a buying opportunity.  Fort Myers’ economy and real estate market will be the beneficiaries – until the next storm.

club house image
Audubon Country Club, Naples, FL


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