Bill Ashley traveled the Northwest for 30 years as a wholesale furniture sales representative, giving him plenty of time to contemplate a retirement filled with golf and warm winter days.
Now, six decades after discovering his passion for the game, he can pull his golf cart out of the garage and drive a minute to Mountain Vista Golf Club, in the resort community of Sun City Palm Desert, Calif., about 120 miles east of Los Angeles.
“I love the game,” said Ashley, who plays as many as five days a week, watches the Golf Channel religiously and has been to The Masters tournament twice. “If I couldn’t play, I’m not sure what I’d do.”
Ashley is the kind of die-hard golfer and second-home buyer who has driven much of the real estate growth in California’s Coachella Valley and other golf-oriented residential areas such as those near Las Vegas, in Arizona, Florida and elsewhere.
But fewer Bill Ashleys are coming.
“We’re not getting replacements for those people,” said real estate analyst Lou Goodkin, president of Miami-based Goodkin Consulting.
“There are fewer golfers, fewer people who can pay the high amounts to buy into a club. There’s going to be a lot more people out there that are challenged in their retirement years than we’ve had in the past.”
Golf resort communities are bleeding money and members, as the recession exposed the vulnerability of the business model that created an unbreakable linkage between golf and real estate.
In the nine cities of the Coachella Valley, including Palm Springs, where multiple presidents, Bob Hope and Frank Sinatra swung the clubs and lived in golf-centric resorts, today nearly one out of every four homes listed for sale is on a golf course.
“We’re entering a new normal,” said Pete Halter, chairman of The Halter Companies, an Atlanta firm that advises developers. “We can’t think this will be over soon. Things have changed for good.”
Among the forces reshaping the relationship between golf and real estate:
•Fewer people play golf, and Baby Boomers don’t have the time, money or interest in the game their parents did. The number of golfers in the U.S. has fallen by 13% in the past five years, according to National Golf Foundation statistics. The number of golf rounds played nationwide last year through November was down 3.5% from the previous year, according to the foundation.
•Nationally, golf memberships have dropped by a million since the early 1990s, and of the 3,400 courses built across the country in the past decade, 93% are daily fee courses, according to industry associations. Coachella Valley golf resorts have responded by slashing often six-figure club membership fees by as much as 70%.
The decline of golf real estate extends to other parts of the country:
•In Missouri, the Sikeston Country Club, about 145 miles south of St. Louis, closed last month after nearly 55 years of operation.
•Paulson & Co., a large hedge fund owning five high-profile golf resorts, including Grand Wailea Resort Hotel & Spa in Hawaii, the Arizona Biltmore Resort & Spa in Phoenix, Doral Golf Resort and Spa in Miami and PGA West in La Quinta, Calif., filed for Chapter 11 reorganization last February. Paulson, in its bankruptcy filing, cited an economic downturn that in recent years caused the resorts to lose more than two-thirds of their annual operating revenue.
•The Club at Cordillera near Vail, Colo., opened only one of its four golf courses last spring, with owners claiming they lost more than $6 million in 2010. Club owners and homeowners have sued one another after many residents balked at paying 50% higher dues last year, from $12,000 to $18,000, while amenities were cut.
Resort communities are already beginning to offer fewer golf courses, and high-priced courses designed by top golfers or famous architects will become rarer, Goodkin said. Allowing non-residents onto club courses and letting them pay by the round will become more prevalent as a way to control costs within golf communities, he said.
“There will be a lot more focus on soft amenities — education, fitness and health programs — not just playing golf four or five times per week,” he said. “Things where there isn’t a lot of physical equipment, land and high maintenance associated with it.”
