Great Deals in Golf-Course Communities

The previously booming golf-community movement is on hold, meaning deep discounts on sweet properties.

By Louis Jones, Kiplinger's Personal Finance

Ryan Wilk, Intern, Kiplinger's Personal Finance

April 23, 2009

GO TO THE SLIDE SHOW: Bargain Homes on the Fairway

If you've dreamed of owning a home with a fairway for a backyard, start shopping. The real estate bubble's burst has brought golf-course-community development to a screeching halt, and many properties on the greens now sell at bargain prices. For example, a two-story, three-bedroom home in the Berkshire Forest golf-course community in Myrtle Beach, S.C., sold for about $250,000 in 2006. Today, it sits on the market with a $175,000 price tag.

Where to Tee Off

Shopping for these homes can be tricky -- we'll discuss good strategies later. But you'll have plenty of properties to choose from. The U.S. has about 3,200 golf-course communities, 1,900 of which have been built since 1990, according to the National Golf Foundation. And about 70% of golf courses currently under construction have a residential component.

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While most of the communities are concentrated in the southern Atlantic states and in Texas, California and Arizona -- where the weather makes golf a year-round sport -- development has spread to cooler states, from Colorado to Massachusetts. Says Elisabeth Miller-Fox, of PrivateCommunities.com: "They're everywhere. We have listings in South Dakota."

Given that golf-course homes are usually second homes, the category has been particularly hard-hit by the rough real estate and stock markets. Experts say home sales in such communities have dipped 40% from a year ago. WCI Communities, for example, has put the brakes on construction on its more than 30 Florida communities and is focusing on selling its 650 vacant properties.

Myrtle Beach real estate agent Jeff Casterline says golf-course homes in his area have dropped anywhere from 20% to 40% in price since 2005. This past winter, Casterline sold a home in the Grand Dunes community, appraised at $2.1 million in 2005, for $1.35 million.

Life Beyond the Golf Course

Golf-course communities have evolved beyond a course lined with houses. Many communities are focusing more on health, educational and social activities. Spas, hiking and biking trails, and high-end restaurants have joined the standard swimming pool and tennis courts.

The emphasis on pampering has morphed into wellness amenities, says Ralph Bowden, a real estate consultant who focuses on master-planned communities. The Cliffs, a set of eight master-planned communities spanning 20,000 acres of South Carolina's Blue Ridge Mountains, offers "lifestyle programs," which include personal fitness plans and diet analysis. The Cliffs each offer residents a spa, several wellness centers staffed by personal trainers, an organic garden -- and six golf courses. Prices range from $450,000 for a 2,600-square-foot four-bedroom home to about $5 million for a 10,000 sq. ft. five-bedroom home.

Developers now offer "intellectual wellness" programs too, such as lifelong-learning centers for retirees. Residents of On Top of the World Communities, in Ocala, Fla., which has four age-restricted neighborhoods for those 55 and older, can take classes on health and wellness, computers and other academic subjects. And at The Georgia Club, outside Athens, Ga., residents 62 and older can take advantage of free classes offered by the neighboring University of Georgia.

Miller-Fox of PrivateCommunities.com says developers have become modern-day town planners, creating green space and building commercial town centers. "That's become the most attractive part of this type of development."

One such community, the Pinehills, encompasses 3,200 acres of hilly land in Plymouth, Mass., about 40 miles from Boston. The property, which opened in 2001, is home to three golf courses. But golf isn't the major component, says managing partner Tony Green. There's an on-site post office, as well as a supermarket, bank, cafe, flower shop, barber, and wine and spirit shop. Development is limited to just 30% of the land, with the rest reserved for open space for common use, such as the ten miles of hiking trails. Only 30% of buyers play golf, Green says.

Even some of these more-lavish communities have seen a steep dip in home values. At PGA Village, in Port St. Lucie, Fla., a four-bedroom, eight-car-garage home, first listed to sell for $1.7 million in late 2006, finally sold in October 2008 for $890,000.

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