Whack.
Chris McLellan lifted his eyes from the tee and watched as the golf ball arched across the fairway at the exclusive Silverado Country Club in suburban Napa, Calif.
A novice golfer, McLellan putted several times before the ball slipped off the thick green carpet of Bermuda-bluegrass and disappeared into the cup on the 18th hole.
A few minutes later, on a picture-perfect afternoon, McLellan was enjoying cocktails on the deck of his newly purchased home just a few hundred yards from the site of his final putt.
McLellan, 58, is a San Francisco securities trader. The decision to buy a home on the grounds of the semi-private country club places him squarely in the middle of a demographic swell that may presage explosive growth in residential golf developments over the next 15 years.
The millions of new golfers expected from the ranks of early retirees, aging Baby Boomers and their children–the `echo boomers’–will redefine golf course living. That’s the prediction of developers and other industry specialists.
Already trends are evident. Gated, million-dollar residential golf communities with 24-hour guards are becoming more exclusive than ever. But today’s penny-watching middle class has started to skirt private golfing communities in favor of less-expensive, semi-private ones that permit non-homeowners to play on their courses.
There are also new phenomena moving onto the links: golfing time-shares and active adult retirement communities where golf is the most important amenity, with housing virtually secondary to lifestyle.
At a seminar sponsored by the prestigious Urban Land Institute recently at Silverado, residential developers said changing demographics are altering the look and feel of new communities.
There are fewer rows of densely packed houses marching down the fairways, creating what some call the bowling alley look. Developers will still build some of those. But more and more, houses are being blended into the landscape. Seniors, women and junior golfers will find many courses are being designed shorter and easier to play.
And mindful that golf is not the only game in town, several developers said they are adding hiking trails, man-made lakes and other nature-oriented amenities to complement their new communities.
These changes are occurring as the number of new subdivisions that feature golf courses last year reached its highest level since the recession of the early 1990s, according to the National Golf Foundation, an industry trade organization based in Jupiter, Fla.
The current interest in golf course homes harks back to the 1980s, when golf was a major growth industry. From 1986, the number of players rose 6 percent a year to reach 27.8 million golfers in 1990, according to the golf foundation. Half of the 290 golf courses that opened in 1989 included residential housing.
But in the ’90s, golfing communities sliced into the recessionary rough. Financing all but dried up for new residential developments, and many homeowners saw their equity decline precipitously. By 1992, only 27 percent of new golf courses included housing.
“The demand certainly did flatten out in the early ’90s, and that correlated with the general flattening in real estate in general,” said Gregg Logan, a senior vice president in Atlanta with Robert Charles Lessor, a real estate consulting firm.
In 1995, however, homes dotted the fairways of nearly one-third of the country’s 468 newly opened links. And a stronger U.S. economy and emerging high-profile golfing stars such as Tiger Woods and Greg Norman can only boost the potential growth in residential communities.
Residential golf development has “a couple of nice things going for it,” said Richard Norton, vice president of the National Golf Foundation.
He said the first of the nation’s 78 million Baby Boomers are turning 50, a prime age for golfing interest. At the same time, the country’s 72 million echo boomers are reaching their 20s and 30s, an age when many adults start swinging clubs in earnest.
If Norton’s projections are close to the mark, the number of golfers in the United States will increase to 31 million in 2010 from 25 million last year.
“The Baby Boomers are hitting their 50s–and this is the age at which people go out and buy second homes in Napa Valley or Lake Tahoe,” Logan said. “At 55, they’re buying not just for a second home; they’re often buying because `I’m going to retire here.”‘
Count McLellan, the securities trader, is a new golfing aficionado who fits the profile. He purchased a four-bedroom house in the $450,000 range–the previous owner paid $620,000 in 1989–as a weekend summer home that ultimately will become his retirement residence.
Graced with stately oak and redwood trees and manicured freshness, Silverado has 1,200 homes ranging from studio condominiums to million-dollar manses. A one-time $35,000 membership initiation fee and monthly $240 dues provide access to two 18-hole championship courses. (McLellan didn’t have to pay the initiation fee because it was paid by the original homeowner member and transferred to him with the property, though there was an $8,300 transfer fee.)
“It was kind of his dream,” said McLellan’s wife, Karen. “He’s gotten the bug so badly I hardly see him. He gets up at the crack of dawn, plays 18 holes, practices putting and pitch, takes a nap, and goes back and practices some more.”
McClellan took up golf only two years ago and admits he’s “struggling but improving,” to the point where he occasionally breaks 100. McLellan said he and his wife bought the home with retirement in mind and that he will have plenty of practice time because he plans to retire “very soon.”
At the ULI seminar, Logan said that the nation’s most-exclusive residential communities won’t lack for buyers over the next decade and a half. Those are retreats where custom homes start at half a million dollars, golf membership initiation fees cost $50,000-plus, and developers can easily spend $5 million to $10 million to build a name designer golf course and up to $1.5 million a year to keep it in spiffy condition.
Take Desert Mountain Properties in Scottsdale, Ariz., for example, which President Rich Sonntag describes as “8,000 acres of heaven on a mountainside.”
Set 3,000 feet above sea level, it has four 18-hole, world-class golf courses designed by Nicklaus and a fifth under construction, two club houses and grass, clay and hard tennis courts among its amenities. It costs $100,000 to become a member, with another $325 in dues each month.
Twenty-four-hour patrols rove the site, and guests are greeted at a gated entrance by a guard in a Smokey Bear hat and a uniform styled after park rangers’.
Homes, etched unobtrusively into the Sonoran landscape, start at $500,000, and prices rise to well over $2 million for custom models.
Nearly 350 homes have been built in the development, which opened in 1988, with another 350 or so under construction or in design review. Two-thirds of the properties are second homes, although that percentage is dropping as primary home buyers migrate away from Phoenix, according to Sonntag.
“Sales are doing quite well,” Sonntag said. “We are sort of riding a nice wave that’s been holding for the last three to four years now.”
While the ritziest facilities are doing well, demand has fallen off at middle-class, private golf communities. Logan said the shrinking affluence of the middle class and decreasing allegiance to the country club scene’s elitist pretentiousness are taking a toll on such developments.
For unlimited golf play and typical equity ownership, members pay initiation fees of up to $50,000 and monthly dues up to several hundred dollars. And the homes carry a country club premium. Homes within the private communities cost up to 50 percent more than similar ones outside.
That has sent more home buyers looking at semi-private golfing communities where they can enjoy most of the trappings of a private club without such high costs. Membership costs are much less–a few thousand dollars–but golfers pay a daily playing fee. The main trade-off is less privacy because public golfers tee up on the same courses and help subsidize the project.
“These days, most consumers, except for the very top, just aren’t looking to tie up their cash in an expensive initiation fee,” Logan said. “This way, they can have their cake and eat it, too.”
