January 2020

An active decade ends, another begins and, like migratory birds, baby boomers are still heading south. In this issue we look back a bit at the twenty teens but look ahead with what we hope is 20/20 vision to what the coming decade holds for the economy, real estate and golf. We also take a look at the quintessential golf and real estate “laboratory” of Myrtle Beach for a taste of what lies immediately ahead.

 
January 2020 
True Blue Golf Club, Pawleys Island, SC

Myrtle Beach Defines a Decade

We humans tend to celebrate round numbers.  I write this mere hours after the ball dropped in Times Square in front of tens of thousands of people celebrating a specific cycle of 365 days.  The newspapers and magazines are filled with stories about highlights — and a few lowlights — of a decade that ended at midnight and a new one that started just after.

In reality, a decade can start and end anywhere you want it to, as long as it comprises 10 years exactly.  In terms of the life span of golf communities, I would argue that the previous decade ended — and a new one began — with the 2008 recession, which threw the entire real estate market into chaos, caused some golf communities to close and others to change in fundamental and long lasting ways.  That decade from 2008 to 2018 was one of restoration, as golf communities could no longer count on an endless supply of golf-interested baby boomers and were forced to accommodate a swath of retirees less interested in golf.  Myrtle Beach, the quintessential area for golfing retirees, as well as visiting golfers, suffered as much as any area. The Grand Strand is littered with golf communities whose former fairways and greens are now filled with condos and small single-family homes — assuming they aren’t populated with overgrown grass and tall weeds.  (The latest victim, Indian Wells, is a fine public course I have enjoyed playing over the last few decades.)

Golf lost a few million regular players during that ’08 to ’18 decade, and that meant golf courses that were neither efficiently run nor well-designed faced financial crises.  Myrtle Beach, which is the ultimate symbol of golf-centric areas, became a microcosm of what happens when an economy hits the skids and discretionary income dries up.  Troubled golf courses became easy targets for any group of people with cash.  A few Myrtle Beach golf course operators tacked on local courses, for pennies on the dollar, to their already established operations, creating multi-course memberships for $99 and up. Since Chinese companies in the early 2010s were flush with cash and eager to take advantage of the EB-5 Visa program that offers permanent residency for certain investments in American companies (including golf courses), one Chinese firm purchased 23 of the Myrtle Beach Grand Strand’s most iconic layouts.  Retirees with an itinerant golfing streak will find a membership in Founders International’s Prime Honor’s program a way to play a different course every day on the cheap.  And for those who prefer the highest quality golf in smaller quantities, Caledonia and True Blue, arguably two of the top five courses among Myrtle Beach’s 90-plus layouts, offer a combined annual membership that will pay for itself in fewer than 30 rounds.

As you will see in our main feature, signs are starting to point to a turnaround in the Pawleys Island real estate market, which is somewhat reflective of the larger Myrtle Beach market.  Selling prices are up for both condos and single-family homes.  The time it takes to sell a home is down and the total number of closed sales was well up, by about 16%.  That is good news for those who bought and sold in 2019, but not such good news for those who might want to move to the area in, say, a couple of years because new listings dropped from 659 in 2018 to 600 last year, creating an inventory shortage for the first time since the early 2000s.  That should encourage new construction, but a shortage in labor and escalating infrastructure and material costs have driven the cost to build per square foot from around $125 three years ago to $160 today. 

Pawleys Plantation, one of the courses owned by the Chinese firm mentioned above, is another example of how golf courses responded to the changes in the market.  When my wife and I bought our condo there in 2000, the developer offered to pay $7,500, half the initiation fee for golf club membership in the semi-private club.  Last year, Pawleys Plantation Golf & Country Club reduced its initiation fee from $15,000 to $2,500 – about 20 years too late for me.

Who knows what the next decade will bring?  In any event, Happy New Decade to all.

 

New Web Site Coming Soon

Psst.  Don’t tell my wife but I will be starting another golf related web site soon.  Okay, she knows and has given me her blessing — well, sort of.  In any case, I had hoped to have the web site ready by the end of the year, but it will be a nice way to start the decade.  It is called Off The Beaten Cart Path, and as soon as it is launched — in a few weeks, I expect — I will send out a note with the link to the site.

Below are a few photos of some of the courses we will review in the first month or two.  We invite anyone with a favorite off the beaten path course to share their thoughts about layout, condition and other aspects.  We will be pleased to post them for all our readers to see.

 

Plantation Course at Edisto Island

Keney Park Golf Club, Hartford, CT

Berkleigh Golf Club, Kutztown, PA

 

A Great Source for Market Trends

I have been reading Bowden’s Market Barometer for nearly a decade, and I have “stolen” from it often, but always with the permission of Managing Editor Judith She′.  It is a treasure trove of real estate and golf market information that, on the face of it, appears to be for industry professionals but includes much to inform those of us searching for a home, especially in the warm-weather Sun Belt.    

For example, the latest issue includes a range of predictions from reliable sources about the nation’s economy and the housing market in general, along with Ralph Bowden’s analysis of the analyses.  As a market consultant, Mr. Bowden has spent decades helping professionals understand the changing landscapes of the retail and golf markets.  He served previously as an official with the respected Urban Land Institute.  

If a couple is contemplating a move in the next year or three, the information in the Market Barometer is fundamental to understanding how a big investment in real estate will fit the larger picture.  The newsletter sums up all the professionally generated data in the latest issue, some of it conflicting, in this way: “We believe that 2020 has the potential to be the best year for new housing adaptation and innovation in a decade. Affordability is a top-of-mind trend that has the propensity to alter the landscape significantly by encouraging builders and architects to think outside the box.”

“Affordable” is a word we all factor into our big-purchase decisions, no matter what we can afford.  If you would like to follow the affordability trend and the other significant market trends and golf-market related news as you consider your next big move, Bowden’s Market Barometer has a special offer for Home On The Course subscribers – a three-issue complimentary subscription (the newsletter is published bi-monthly).  Write to Judith She′ at This email address is being protected from spambots. You need JavaScript enabled to view it. 

After that, you can make the (wise) decision to subscribe at a deep discount to the rate Bowden’s offers at its web site.   www.bowdensmarketbarometer.com  Just mention Home On The Course and you will receive the special subscription offer.

 

 


If you are considering a search for a permanent or vacation home in a golf-oriented area, please contact me for a free, no-obligation consultation at This email address is being protected from spambots. You need JavaScript enabled to view it.


A Decade Ends, Another Begins, and 
Changes Abound for Golf Communities

 

I made my first foray into golf community research and reviews 15 years ago.  At the time, I knew a bit about golf, from the player’s side, and nothing about real estate.  A decade and a half later, I know a little more about both, with most of my instruction having come from country club pros and real estate people I have met, and from clients who have trusted me to help them find a golf home and showed me what’s important to them, and what is not.

As we start a new decade, there are some things we can be sure of about golf and real estate.  And then there is the stuff of pure speculation, although I prefer to call it intuition.  The following is a little bit of both.

The Migration South Continues

“If you build it, Ray, people will definitely come.” That line, from the 1989 movie Field of Dreams, sums up the relationship between baby boomers and amenities-loaded planned communities in the Southeast.  After licking their wounds for a few years after the Great Recession, developers started building retiree-friendly communities again in the Carolinas, Georgia, Florida and other areas of the region, although not fast enough to accommodate all of those retiring baby boomers (see below).  Developers can read data as well as the next person; relatively few new communities include golf courses since, in the last decade, more golfers left the sport than joined (and the mainstream media made a big deal of that).  

“You need between 1,200 and 2,000 homes on site to make a private golf course financially viable,” veteran developer and golf community consultant Ken Kirkman told me recently, adding that estimate applies to a residential golf club with few if any outside memberships.  Large plots of land suitable for such large communities have become a rarer commodity in the Southeast, and developers are inclined to take a more modest approach to investment.

But people continue to head south, especially to the Carolinas and Florida, and with the back end of the baby boomer generation not ready to retire for at least another 10 years, the perquisites of a warm climate, lower taxes, and more stress-free environments will continue their magnetic pull.  

The Future of Golf 

According to a Statista.com study, almost 24 million Americans played golf at least a few times last year.  That figure reversed the course of the prior 10 years which saw a drop from 29.5 million golfers to just under 24 million in 2017.  (The National Golf Foundation says another 9 million participated in off-the-course golf activities in 2018, such as watching golf on TV and playing at such entertainment venues as Top Golf.)  The best news of all: 2.6 million new golfers joined the rest of us in 2018, the most ever in a single year, topping the next largest addition of 2.4 million in 2000 when Tiger Woods was at the height of his popularity.  The upshot is that reports of the death of golf have been exaggerated.

This is good news for all businesses that depend on golf for survival and growth, none more so than golf communities, which rely on their country clubs to attract people to purchase the adjacent homes.  Real estate agencies trying to sell to incoming baby boomers should take heart that the number of older golfers increased in 2018 by 17%, to a total of 4.2 million.  And folks over the age of 65 played an average of 36 rounds annually.

Inventory, Pricing Puts Pressure on Retiree Expectations

As the popularity of golf begins a modest rebound, we will see new pressures on prices retirees will have to pay to live in Southeast Region golf communities.  That is because inventories of current homes for sale in many golf communities are at their lowest levels in years.  A sellers’ market puts upward pressure on prices, and new construction has not yet been able to fill the need.  In fact, prices for construction materials have risen in recent years (except for lumber), as have the costs of labor, especially because the market for construction labor is tight.

“At Landfall,” said Ken Kirkman, who developed the New Bern, NC, community Carolina Colours and has had a longtime relationship with Wilmington, NC's Landfall, “about 6% of all homes are typically for sale at any given time.  Right now, there are just 54 homes on the market of the total 2,000 homes at Landfall.

“That is 50% less than is typical.”

Ken told me that one big challenge to new construction is the rather unpublicized costs of infrastructure, such as roads and water and sewer pipes.

“Infrastructure costs have gone nuts,” he said.  “It takes about $40,000 for us at Carolina Colours to prepare a half-acre lot, and that doesn’t include the cost of the lot itself.”  He added that the infrastructure cost 10 years ago was about $18,000 per lot.

Cathy Bergeron, our real estate agent in Pawleys Island, SC, recently wrote that the local market outlook for 2020 is “less inventory and values [of homes] rising…” In 2018, the median price of homes in the Pawleys Island market rose 6.41%.  She added the following advice: “Now is a good time [to sell]. There is less competition in the selling market, and if [you are] purchasing, prices are not going lower.”

Nationally, home price increases have averaged a little over 5% in the last two years.  Put simply, a couple that waits a year to buy a $300,000 house may see the price rise to $315,000 in 2021.  In two years, if the trend continues, that same home will be listed above $330,000. Making matters potentially worse for baby boomers is what real estate site Zillow refers to as the “Silver Tsunami” of retirees selling their homes and moving to warmer climates.  If developers don’t speed up the building of new homes and new communities, the inventory situation in the South may become even tighter.  (I have this notion that such a situation may spur multiple couples to jointly purchase properties and live together, somewhat mimicking the communes of their youth in the ‘60s.)  But if the costs to build new homes continue to jump, retirees will face the reality of accepting smaller homes with fewer bells and whistles in them. 

In places like Pawleys Island, one way around the current tight market is to buy a lot and build your own home.  Although condo and single-family home prices are up impressively year over year, property sales have languished.  I know this personally as I have listed a property on the 16th fairway of the Jack Nicklaus layout at Pawleys Plantation at 40% below the price I paid for it in 2008, about “15 minutes before the Great Recession started”; that’s my gallows humor line when anyone asks me about it.  Patio lots (1/4 acre) in Pawleys Plantation are listed for well under $100,000; with construction costs running at about $160 per square foot, a new home might cost around $400,000 all in a mature, well landscaped and gated community with one of the best golf courses in the Myrtle Beach area.  (Insider news:  The owners of the golf course just announced to members that the course will be updated in 2021 by the Jack Nicklaus Group.)

Dos for Your Golf Home Search…

For those planning to retire and relocate in 2021 or to find a vacation home with plenty of opportunities to play golf, my advice is “go fast but not furious.”  Do decide on the area where you want to live, without compromising your absolute requirements.  For example, if you have medical concerns, make sure you choose a place with at least one good hospital nearby (good hospitals attract good doctors to the area).  If you plan to travel often, do choose a community with a good regional airport within an hour.  Do identify a near-urban golf community if you expect to miss the theaters, museums, and wide choice of excellent restaurants you were used to near your previous home.  Have a real estate budget in mind, but be flexible with how you allocate it.  It makes no sense to spend, say, your total $400,000 budget on a golf community home if the initiation fee at the community’s private country club is another $25,000.  Buy a $375,000 home instead; you don’t want to stand in the backyard of your dream home looking out at all the golfers playing the course you could not afford.

Ken Kirkman offers a creative idea for those contemplating a move in the next few years but worried about rising costs.

“If I were going to retire in the next three years,” he told me, “I would buy a resale home now, especially given the low current interest rates, and rent it out until I was ready to occupy it.”    

…and Don’ts

Don’t even think about searching for homes online before you narrow down your search to an area and one to three golf communities in that area.  It makes no sense to fall in love with a house online if the golf community ultimately does not pass muster.  Even in current low-inventory markets, you will find plenty of choices for a home that suits you and is in your price range.  The first task is to find a location near the services you need in a community that satisfies most, if not all, of your requirements.

In an area with a range of communities, don’t limit yourself when it comes to choosing a real estate professional.  Some communities, especially the newer ones, maintain on-site agencies whose representatives are extremely knowledgeable about their communities but can only show you properties in that community.  That is fine if you have narrowed your search to just that one community.  But an “independent” Realtor can tour you through all local communities and show you any house or property you want to see.  

And, finally, don’t obsess about whether the people in your new community will like you or whether you will fit in.  If you are likable, you will be embraced. 

 

The Southeast Rises Again…
in Population Growth

United Van Lines recently published its annual report on relocations between states, and the pattern remains pretty much the same as in recent years — people continue to leave colder, industrial states of the north and move to warmer climates across the southern U.S.  There a few blips in the pattern, however, with Idaho becoming the #1 state in terms of percentage of incoming residents compared with outgoing residents, Oregon #2 and the state of Washington at #5.  (Vermont would have been #1 if it weren’t for a 250-moves minimum in the study in order to be counted in the top 10.)  These states all have strong libertarian strains, and the net in-flows could be a reaction to the nation’s current political climate.  Other theories from more savvy sociologists than I are welcome.  We should note that, compared with relocations to states such as Florida and Arizona, Idaho and the other top states show smaller overall numbers of migrators. 

All other net migration figures are pretty much in line with the last couple of decades.  Arizona weighs in at #3 and South Carolina #4.  Florida rejoins the top 10 at #7, and North Carolina is #9.  At the other end of the spectrum, New Jersey saw the most net outflows followed, in order, by Illinois, New York and Connecticut.

On the face of it, the continuing migration south is good news for the warmer states, given the net additions to their tax rolls (no-income-tax states like Florida and Alabama rely on sales and other taxes).  Greater populations mean the many companies that relocate to the southern states will find viable employees to hire.  And because many of those making the move south are retirees, charitable organizations will find an ever-growing pool of volunteers with plenty of time on their hands.  (We won’t tackle here the potential for a changing political climate in states to which lifelong northerners are bringing their preferences, but this could make for significant voting changes in the coming years.)

The biggest question is whether local governments are smart and flexible enough to handle the burgeoning populations in terms of road building and other important public services.  Baby boomers, especially those seeking to avoid the traffic, pollution, increasing costs of local services and all the other aspects of life in their former towns, should expand their research parameters, including census predictions, before deciding where to live.  Temperate year-round climates are one reason to relocate, but bad decisions by town fathers and state legislators could certainly leave relocating boomers out in the cold.

You can find the 2019 United Van Lines survey here:  https://www.unitedvanlines.com/newsroom/movers-study-2019

 

Larry Gavrich
Founder & Editor
Home On The Course, LLC

 

 

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