December 3, 2019 — For baby boomers who love to play golf, living on a golf course seems like a dream. Drive over in your golf cart and play any time you want, no waiting. Later on in the afternoons, sit back and enjoy the beauty of a golf hole in the setting sun from your lanai. Unfortunately, golf is not as popular as it once was. That decline is interrupting the dream of golf course living.
Our friends over at www.retirehoppy.com just wrote about unpleasant experiences at their community, Trilogy at Vistancia in Peoria, Arizona. Seems like the developer has changed its mind, and now would like to sell the golf course to the Home Owners Association. Nobody there knows what is the best decision. Buy it (HOA has first right of refusal), or let the developer try to sell or develop it? Either way is fraught with problems.
According to the National Golf Foundation about 200 golf courses closed in 2017, more than ten times the number of ones that opened. Many of the approximate 1200 U.S. communities that have golf courses within them were built from 1970 to 2010. Some of those are having problems. Communities find golf courses are expensive to maintain. Not all homeowners want to play golf, or pay for their upkeep. As a result, declining revenues make some courses unviable.
Various solutions have been tried to fix the problem, depending on who owns the course – developer or HOA:
- Offer the golf course to the HOA or an outside entity
- Close it down or drastically reduce its budget
- Reduce the number of holes or courses
- Dramatically increase dues and assessments
- Make members of the association pay for golf or social memberships, even if they don’t play
- Turn the space into something else – a farm, park… or additional houses
Some communities have been able to recover when their golf course closed. One of those is Sapelo Hammock Golf Club, in Shellman Bluff, Ga. When that course stopped operations the homeowners contributed to a fund and purchased the course. Now they volunteer to help keep it going.
Although it used to be conventional wisdom that living on a golf course increases property values, the opposite is beginning to happen. When the golf course starts to fail there are no good solutions. The HOA will be wracked with problems and difficult issues. Lawsuits start. Some owners stop paying their dues. If the HOA takes over, it could find that maintenance and capital issues wreck the budget. Homeowners who bought with the intention of living on a golf course find their views and access destroyed. If the course closes or its condition continues to deteriorate, values go lower, and existing owners are stuck.
Two golf courses that have closed in recent years are the Coffee Creek Golf Course in Edmond, OK, and StoneRidge Country Club in California. Others are struggling too. The Wall St. Journal reported in a very informative article, “Golf Home Owners Find Themselves in a Hole“, that homes in golf course communities stay on the market about 27% longer and benefit from only a small difference in price than other homes (it used data from Realtor.com).
The vast majority of communities with golf courses are stable and not in any danger. Homeowners who live in them joined for the golf and they want to see that interest protected. But caution is advised, whether you are a prospective buyer or an existing home owner.
Prudence and Caution Always Advised
If you are thinking about living on a golf course it is extremely important that you do your due diligence. Examine all the financial documents you can to see how healthy the community is, especially the golf course operations. Talk with homeowners and try to see how the wind is blowing – do they love the course, play often, and seem protective of it? Or do they not play, complain about the expense or conditions, or otherwise seem negative? Only with that kind of information can you make an informed decision. There are plenty of places where you can live near a golf course, but not on it, without any of that risk!
Who owns the course makes a big difference. Some developers care tremendously about protecting their product (the golf course being part of that). But others might take cut and run if the numbers go south. If the HOA owns the course, you probably have more protection, because the residents can control their own destiny better. But even then, if the community experiences financial problems and/or the course starts losing too much money, unpleasant decisions might have to be made.
Comments? Do you live in a golf course community? Do you love it, or do you wish you had made a different decision. Please share your experiences in the Comments section below!
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