Looking Good:
Some golf communities reach middle-age,
but real estate bargains there are anything but middling

    The heyday for construction of golf community developments was the mid to late 1980s and into the ‘90s, although some communities, especially those in Florida, have already passed their 40th birthdays.  As with human pathology, if you make it to your 35th or 40th birthday, chances are you are going to be around a good while longer.  And you not only gain an edge in experience but you also tend to make fewer mistakes than do younger whippersnappers.  As we learned just before and during the 2008 recession, youth can be wasted on the young golf communities (Cliffs Communities, Reynolds Plantation, anything owned by Bobby Ginn’s banks).  The circa 1980s golf communities aren’t getting older; they are getting better in some fundamental ways, not the least of them real estate pricing.

Commitment is better than involvement
    Older golf communities are almost exclusively run by their residents, and in most cases, the property owners are in charge of the golf club as well (often to good effect, sometimes not).  Like the old story of the ham and eggs breakfast -- the chicken is certainly “involved” but the pig is really “committed” –- communities that are run by committed residents generally are less risky than those run by an involved developer whose ultimate aim is to sell his lots and move on.  On balance, residents care greatly about their homes’ values and when they are in charge, they will tend to make decisions in that light.  Developers care about selling land and spec homes, even if their pricing decisions are not always in the best interests of the folks to whom they have already sold property.  (We know of a few communities, for example, in which the developer’s real estate agents are compensated way less for selling lower-priced resale properties than for the developer’s available dirt -– creating price competition between developer and resident inside the gates.)
    Property Owner Association boards keep notes of their meetings, a good source of information about financial reserves, operations and other issues a cautious buyer will want to know.  Most resident-run golf communities make their financial information available to any potential resident that asks.  According to General Manager Larry Appleby at the 25-year old Champion Hills in Hendersonville, NC, for example, the club and community will share their financial highlights with any potential buyers who ask.
    “…with the changing economic conditions in 2008,” says Appleby, “[customers want] to research and perform their due diligence carefully when considering a golf course community…I’m proud to say Champion Hills POA (property owners association) and Club have no outstanding long-term debt [and] have a replacement reserve fund in place…”
    As a potential buyer in any golf community, you are within your rights to ask to see the financials; the communities are within their rights to refuse, since you are not (yet) a property owner.  But the smart, solvent ones won’t refuse.

The (relatively) high cost of a trophy home
    Most customers want new homes, or at least a home of recent vintage.  After all, who wants to deal with icky reconstruction of kitchens and bathrooms?  (Note: Your editor and his wife totally redid a kitchen in our home and would do it again, so we vote, “We would!”)  Generally speaking, buyers are willing to spend a few thousand dollars more in a brand new home for granite counters, upgraded kitchen appliances, hardwood floors and other new accessories lacking in some 40-year-old houses.  But if you calculate the cost of a new home compared with one, say, built 25 years ago, you might find that the difference would be more than enough to pay for an entire houseful of upgrades in the resale home -– with money left over for an initiation fee for the golf club, airplane tickets for the kids and grandkids to visit, and perhaps an escape vacation during the heat of the summer or the darkest days of winter.
    "Most buyers are opting to purchase existing inventory in today's market due to the good inventory of resales that average between $70.00 to $100.00 per square foot (2,500 to 3,500 square foot home), plus a garage and the lot with landscaping," says Bob Hill, who runs Bob Hill Realty located at the foot of Keowee Key in Seneca, SC. "They can then remodel to their own tastes while living in the home and enjoying the community without the wait for new construction." Keowee Key offers some of the lowest priced waterfront real estate in our experience (see accompanying sidebar).
    The spread between a new home and old one, however, isn’t always wide enough to dissuade purchase of a new one.  At Woodside Plantation, for example, a 28-year-old golf community in Aiken, SC, a new home with nice accessories like granite counters and hardwood floors in some rooms will cost about $173 per square foot, land included.  An existing home, built in the late 2000s and with similar fit and finish, costs about $161 per square foot.  For a 3,000 square foot home, therefore, the savings in buying a resale home of recent vintage is about $36,000 compared with building a new one.  The difference in cost may not be material to a couple that wants their own personally designed layout and a choice of fittings, but to some, the savings could make the difference in being able to afford to live in a particular community -– or pay the initiation fee for the golf club.

Closer to civilization
    Forty years ago, land near attractive cities and towns was more plentiful, and cheaper, than it has been in the last two decades.  The Landings golf community in Georgia, for example, which recently celebrated its 40th anniversary, is a mere 20 minutes from downtown Savannah, one of the Southeast’s most interesting cities and filled with all the services baby boomers require and desire.  And yet, once inside the gates of The Landings, you feel as if you are as far away from civilization as you are at, say, the Cliffs Communities beside South Carolina’s Lake Keowee, which are a good 50 minutes from Greenville.  Even the aforementioned 40-year-old Keowee Key, which shares a Lake Keowee address with The Cliffs, is just 20 minutes from the towns of Seneca and Clemson, home to the university of the same name.
    The Landings, which comprises 4,800 acres and hosts more than 8,000 full- and part-time residents, runs as efficiently as a corporation that has been humming along for 40 years under stable management.  Its six golf courses are crowded at the height of the season, and yet few members ever complain about not getting the tee time they want (although they may have to wait an extra day or two to play the specific course they want).  Sheer size can present certain key advantages:  The Landings’ women’s golf association, for example, is the largest in any golf community in the U.S., and the on-site real estate office, supervised by property owners –- most of its agents are residents -- contributes seven-figures worth of revenue to community coffers in the good years.  That is an advantage that less mature, developer-run communities do not have…yet.
    Wilmington, NC’s Landfall golf community recently hit the 25-year mark, and although it is positioned on the coast, as its name suggests, just a few minutes from Wrightsville Beach, it is a mere 15 minutes from downtown Wilmington, one of the most active and growth-oriented towns on the east coast.  Member/residents of Landfall own the golf club and its 45 holes of golf (Nicklaus and Pete Dye), and they once owned the on-site real estate office, which they had purchased from the former developer.  They later sold the firm to its agents, a decision they may regret since sales are humming once again at Landfall.  The nearby Porters Neck Plantation golf community actually started selling lots in the early 1950s, but it did not truly reach golf community status before Tom Fazio laid out the 18-hole course that opened in 1991.  (The golf course is available for public play but at a high greens fee rate that dissuades the riff raff and gives Porters Neck the feel of a private club.)  Porters Neck, which has an on-site real estate office that is independent of the POA, is also just about 15 minutes to the center of the thriving city of Wilmington.

Variety the spice of life in older communities
    Condominium ownership was more popular 25 to 30 years ago than it is today.  About 75% of my customers looking in the $200,000 to $300,000 range, for example, specify single-family homes rather than condos as their top choice.  My wife’s and my own vacation community, Pawleys Plantation in Pawleys Island, SC, opened in 1989 around a fine Jack Nicklaus course.  We own a condo there, but those considering the community as a place to live full or part time can choose among patio homes –- typically up to 2,000 square feet and set on ¼ acre lots –- single family homes, town houses and the aforementioned condos.  Prices range from the low $100s for the town houses to a few big homes with marsh views for just over $1 million.
    Golf communities like Pawleys Plantation double as golf resorts, and vacation homeowners looking to defray some costs may consider renting out their units when they are not using them.  This is easier in communities with an embedded base of condos, which lend themselves to short-term rentals more than single homes do.  DeBordieu Colony does not present itself as a resort community, even though it includes the only private beach in a gated community on the South Carolina coast, as well as a fine Pete Dye golf course.  DeBordieu does not have too many town homes or “villas” in its portfolio of houses, but on DeBordieu’s web site, rentals now get billing right along with homes for sale.  For example, a 2 BR, 2 BA villa at ocean side and with easy access to the beach, a pool and the golf course, rents for between $1,500 and $2,700 per week, depending on season.  The owners are likely paying a fee of between 40% and 50% for DeBordieu Realty to handle all aspects of the rental, including marketing, housekeeping and insurance.  But for a couple looking for a few weeks a year by the beach and an excellent golf course to play when they are in residence, as well as a way to help pay for it, the price may be right. 

Old may be the new new
    The first home I ever purchased (in 1978) was brand new, and it was a kick to choose paint colors, the types of counters we wanted, specific floor coverings and appliances.  Five homes later -– I rented a number of apartments along the way –- I have the urge to build a new home one last time.  But before we consider building on the lot we own on the South Carolina coast, we will look at comparable resale homes.  And I know that what we will find is an abundance of fine homes to suit our taste at prices that, comparatively speaking, will be hard to ignore.

Oops

    In last month’s newsletter, we listed a home for sale at The Landings near Savannah for a price of $278,300, or $105 per square foot.  That home was not available for sale.  We apologize for the error.

   Larry Gavrich, Founder & Editor

   GolfCommunityReviews.com

   GolfHomesListed.com