Golf courses around the country may face an uncertain economic future, but the homes adjacent to them continue to command higher prices from prospective buyers, according to a new study of real estate transactions in South Florida by faculty at Florida Atlantic University.
Looking at more than 10,000 transactions from properties in Palm Beach, Broward and Miami-Dade counties that sold and closed in 2015, the researchers at FAU conclude that having a property adjacent to a golf course adds between 8% and 12% to property value on average.
"Preliminary results from statistical pricing models suggest that properties receive a pricing boost," said Ken Johnson, Ph.D., a real estate economist and an associate dean of graduate programs and professor in FAU's College of Business. "Thus, there is strong evidence to concluded that golf courses remain a positive draw to potential property owners."
With more than 800 golf courses closing in the United States in the last decade, residents, developers and municipal officials around the country are facing decisions on whether to convert under-performing golf properties to housing developments or keep them as golfing communities.
"The strong statistical evidence supporting a pricing boost for being adjacent to a golf course should help property owners, developers and city officials make quicker and more financial fair decisions," said Ksenija Bogosavljevic, a graduate student who's working with Johnson on the study as part of ongoing research on the viability of golf course communities.
In South Florida, Johnson acknowledged that there are many golf courses trying to decide whether or not to continue in the face of failing financial performance. Many golf properties are declining into a state of repair that could negatively impact adjacent property values. On the other hand, the remaining demand for golf and being adjacent to courses could create a market scenario whereby being adjacent to a course could actually add a premium to property value, on average, he added.
"Uncertainty over value destroys deals, and these findings reduce that uncertainty and should result in quicker resolutions one way or another," said Johnson, coauthor of the Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index. "In the end, no one wants a vacant course."