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March 2017

Homes on golf courses can attract buyers and command higher prices

Researchers also found downsides when owners close courses

Homes adjacent to golf courses draw buyers and command higher prices - at least in South Florida, according to new research.

An analysis of 10,000 transactions that sold and closed in 2015 in Palm Beach, Broward and Miami-Dade counties revealed that properties next to a golf course fetches a premium of 8-to-12 percent on average.

The study was conducted by faculty at Florida Atlantic University.

"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 conclude that golf courses remain a positive draw to potential property owners."

Researchers noted more than 800 golf courses have closed in the United States (including some in Washington state) in the past decade due in part to oversupply. That move has prompted residents, developers and municipal officials around the country to face decisions whether to convert underperforming golf properties to housing developments or keep them as golfing communities.

Facing failing financial performance, some course owners have allowed their property to fall into a state of disrepair that could have a negative impact on nearby property values.

Other owners have donated golf course land to nature trusts and local parks in order to take a tax break, according to Bloomberg reporter Patrick Clark. "Others have inked deals with homebuilders," he wrote, but added, "those deals are often contingent on winning approval from homeowner associations or local governments."

"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 financially fair decisions," said Ksenija Bogosavljevic, a graduate student who is working with Johnson on the study as part of ongoing research on the viability of golf course communities.

"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."