After a spike in golf course construction since 1988, a surplus of luxury real estate and a down housing market created the “perfect storm,” The Wall Street Journal reported.
A recent report in The Wall Street Journal spotlighted the rise and fall over the past two decades of luxury real-estate communities with high-end golf courses.
In 1988, the National Golf Foundation set a goal of building “A Course A Day,” the Journal reported—but after the golf industry, and the real-estate market, began suffering 20 years later, private golf communities have been dropping prices radically, and even paying people to take over land.
The Journal highlighted one Ohio couple who “bought” a lot at South Carolina’s Colleton River Plantation in Bluffton, S.C., for free, with the seller paying the $15,000 club initiation fee and the first year of $17,000 annual membership dues.
Now, gated communities are appealing broadly to families and repurposing by reducing courses to nine holes and selling the reclaimed land. Communities near clubs like Belfair Plantation, Colleton River Plantation and Berkeley Hall, all in Bluffton, S.C., sold lots for at least $150,000 each that are now on sale for $1, the Journal reported.. Investors who bought but never built on their lots are trying to unburden themselves.
Other communities have seen real estate prices drop from $300,000 to $39,000.
The Journal reported that while the housing downturn is partly responsible, the development bridge that created too many courses as golf began to fade in popularity has only exacerbated the problem. Between 1990 and 2003, nearly 3,000 new courses were built in the U.S., with many linked to the luxury real estate market. About 40% of the courses built in the 1990s were tied to real estate communities.
With national rounds last year dropping to 463 million from 518 million, more than 350 golf courses have closed since 2005. In 2011, more than 150 courses closed. The National Golf Foundation found that about 2,000 of the 16,000 golf courses are “financially distressed.”
Golf communities and real estate agencies are combating the problem by lowering initiation fees and offering extra incentives for home sales.