Article Courtesy of The Wall
By Candace Taylor
Published January 14, 2019
Lawsuits pile up and fairways fall into disrepair as younger Americans shun
golf, leaving behind homeowners who paid a premium for life on the links
When Mitch Steller first moved into his house on a lush 117-acre golf course in
Southern California, “this was like the Garden of Eden, having a golf course in
my backyard,” he said.
Today, his Poway, Calif., home overlooks dry, dead grass in place of a
once-verdant fairway. The golf club closed in 2017. “The fairways are brown, the
greens are gone, the buildings are being vandalized,” says Mr. Steller, a
70-year-old maritime-management consultant.
Forty years after developers started blanketing the Sunbelt with housing
developments built around golf, many courses are closing amid a decline in golf
participation, leaving homeowners to grapple with the consequences. People often
believe a course will bolster their property values. But many are discovering
the opposite can now be true—and legal disputes are erupting as communities
fight over how to handle the struggling courses.
“There are hundreds of other communities in this situation, and they’re trapped
and they don’t know what to do,” says Peter Nanula, chief executive of Concert
Golf Partners, a golf club owner-operator that owns about 20 private clubs
across the U.S. Pic Roughly 40 percent of the units at Akoya Boca West
(rendering shown), a condo under construction in Florida’s Boca West gated
community, remain unsold after three years on the market.
One of his current projects is the rehabilitation of a recently acquired club in
Florida that had shut one of its three golf courses and sued residents who had
stopped paying membership fees.
More than 200 golf courses closed in 2017 across the country, while only about
15 new ones opened, according to the National Golf Foundation, a golf
market-research provider. Florida-based development consultant Blake Plumley
said he gets about seven phone calls every week seeking advice about struggling
courses, from course owners or homeowners’ associations. He said most of those
matters end up in court, and predicted that the U.S. is only about halfway
through the number of golf-course closures that will eventually occur.
When a course closes, prices for nearby homes typically fall about 25%, Mr.
Plumley said. Prices can plummet 40% or 50% if a contentious legal battle
arises, as potential home buyers balk at the uncertainty accompanying
In the 1980s and ’90s, developers flooded the market with golf-course
communities, offering not just golf but manicured grounds, a resort-like feel
and an instant social life. The country now has about 3,800 private golf clubs.
Of the roughly 1,200 private clubs with homes within or adjacent to the gates,
some 950 were built between 1970 and 2010, said Jason H. Becker of Golf Life
Navigators, a company that helps home buyers find clubs. The communities are
structured in a variety of ways: some golf clubs are owned by a homeowner’s
association, while other communities border separately-owned courses.
But golf’s popularity has declined in recent years, as younger generations
haven’t taken to the game with the same level of enthusiasm as their
predecessors. Golf participation peaked in 2001, when nearly 30 million people
played more than 500 million rounds; in 2017, that figure dropped to nearly 24
million people playing about 450 million rounds, according to the National Golf
Foundation. In 2005, there were more than 16,000 golf courses in the U.S.; in
2017 there were fewer than 15,000.
In the early 2000s, as golf communities starting feeling the strain, many clubs
began requiring all of their home buyers to become members. Designed as a way to
guarantee more cash flow for clubs, so-called mandatory membership can end up
harming home values by narrowing the pool of potential buyers. “What we are
consistently seeing is that those properties, all else being equal, are selling
way below what they should be selling for,” says Ken Johnson, a real-estate
economist at Florida Atlantic University.
In Lake Worth, Fla., the Fountains of Palm Beach community in the early 2000s
made it mandatory for all of its homeowners to become members of the Fountains
Country Club, located within its gates. As the original owners of homes in the
Fountains started dying or moving out, mandatory membership made it difficult to
sell their homes, says Fountains homeowner Sharon Harrington, who also works as
a real-estate agent in the area.
“The younger people are not interested in golf,” Ms. Harrington says. “They
avoid these communities altogether.” Values started going “in the toilet,” Ms.
Harrington said. “People just needed to get out.” Homes that had previously sold
for around $400,000 traded for than less than $200,000, she said.
Meanwhile club fees were rising; Ms. Harrington said by 2016 her dues had
climbed to around $24,000, up from less than $5,000 when she first joined.
Feeling that the costs were unjustified, she stopped paying her dues. A number
of other residents also stopped paying, and the club filed lawsuits to get them
In 2016 the club closed one of its three golf courses at the site, and in 2018,
the members voted to sell the club to Concert Golf Partners. The Fountains no
longer has mandatory membership, and home prices are recovering, said Mr. Nanula.
He said Concert also paid off the club’s debts and has made capital improvements
to its facilities, and is in process of preparing the now-closed third golf
course to be redeveloped as housing.
Ms. Harrington said the suit against her was dropped after Concert’s purchase,
as were others that hadn’t already been dismissed or resolved. While she still
owns her home at the Fountains she is no longer a member of the Fountains
Country Club, and now belongs to another nearby golf course.
Other clubs have held on to the idea of
mandatory membership. In Boca Raton, Fla., a new 10-story
condo called Akoya Boca West is under construction in the
Boca West gated community. Buyers must become members of the
Boca West Country Club, which requires an initiation fee of
$70,000, plus monthly dues of roughly $1,000.
Roughly 40 percent of the project’s units remain unsold
after three years on the market, says Robert Siemens of
Siemens Group, the project’s developer. With sales lagging
early on, he said Siemens redesigned some of the units in
response to feedback from potential buyers. But he doesn’t
believe the club’s mandatory membership is a deterrent to
buyers, for whom prices now start at around $1 million.
“These are highly successful people with a lot of disposable
income,” he said. “If they want to live in Akoya, that
$70,000 is not going to stop them.”
Among the buyers at Akoya are Phil Kupperman and his wife
Jill, who are in contract to buy a three-bedroom apartment
there. Currently residents of another development within
Boca West, they are downsizing from a roughly
Mr. Kupperman, a self-described “golf
fanatic,” said Boca West’s amenities—including four golf
courses—more than justify the cost. He said he views
mandatory membership as a positive, providing funds to keep
the clubs’ infrastructure up-to-date and ensuring that “the
people coming here are the people you want in your
community,” since they are vetted by the country club before
being allowed to join.
Roughly 40 percent of the units at Akoya Boca West
(rendering shown), a condo under construction in Florida’s Boca West
gated community, remain unsold after three years on the market.
The Kuppermans have faced difficulty selling their current Boca West house,
which they bought for $1.175 million in 2005. After hitting the market about
three years ago for $1.575 million, the house is now priced at $999,999. The
Kuppermans blame market softness.
When a golf course closes, it causes distress for people who live on the course,
many of whom paid a premium for a location overlooking the links. “We all paid
more money to have a golf course lot, and to have that taken away just doesn’t
seem right,” said David Jacobson, who owns a home on Edmond, Okla.’s now-closed
Coffee Creek Golf Course. After the public course was sold and closed in 2017,
the Coffee Creek homeowners association filed a lawsuit against the new owners
claiming that they have a duty to continue operating a golf course on the site.
The suit is ongoing.
“They hadn’t made money at that golf course in years,” said Kyle Copeland, who
bought the property with partners in 2017 and plans to develop it, noting that
it is zoned for single-family residential. “The thing is going to be
redeveloped—it’s not ever going to be a golf course again.”
The city council in November denied Mr. Copeland’s initial plan for a mixed-used
development on the site of the former course. He now plans to build
single-family homes there instead.
At Mitch Steller’s California home, which overlooks the brown grass of the
now-closed StoneRidge Country Club, the golf course isn’t coming back any time
soon. Longtime resident Kevin McNamara recently acquired an option to purchase
StoneRidge from current owner Michael Schlesinger. Mr. McNamara is a former
member of the club, which he says had been struggling financially for years amid
dwindling membership. When contacted by The Wall Street Journal, Mr. Schlesinger
requested a list of emailed questions but didn’t answer them.
After signing the option agreement, Mr. McNamara said he asked consultants about
the feasibility of reopening the course, but “they just laughed at me,” he said,
adding: “The economics just don’t work anymore.” Instead, he’s planning to build
an “agrihood” development on the 117-acre parcel, with 162 homes and about 40
acres devoted to agriculture, such as a butterfly farm. Mr. McNamara’s plan has
to be approved by local residents through a citywide vote.
For some, it is paradise lost. Lou Altieri, a 68-year-old who paid more than $1
million for a house at Kensington Golf & Country Club in Naples, Fla., in 2005,
likened his initial experience of living in a golf community to being “on a
cruise ship all the time.” When he joined the club, he said he was told he’d get
a partial refund of his $45,000 initiation fee if he left. But when he decided
to resign from the club several years later, he was told there were about 60
people ahead of him on the “resign list,” each with a membership that had to be
sold to a newcomer before Mr. Altieri could receive his refund.
Unwilling to accept this, Mr. Altieri stopped paying his dues, and the club
sued. The two parties eventually settled in arbitration and Mr. Altieri left the
club, selling his house at a loss in 2011.
Kensington’s General Manager, Dave Krzywonos, said the club has since changed
its rules to give members more options for resigning, and says “refundable
memberships” like Mr. Altieri’s are no longer sold. Members who join now can
quit after a year-long waiting period, but those who resign must maintain a
social membership for a reduced fee as long as they live in the community.
Mr. Krzywonos acknowledged the problems facing the golf-club industry. “They
built so many clubs,” he said. To ensure financial stability, he said,
Kensington and other clubs have little choice but to institute rules such as the
social-membership requirement. “A club cannot exist in a gated community if you
don’t have 70 to 80 percent of the members supporting it,” he said.
The Golf Market
273 counties analyzed by Realtor.com, homes with the word “golf” in their
listing description were on the market for a median 75 days, 14 percent higher
than the median for their respective counties and 27 percent higher than the
nationwide median. The median listing prices for these golf homes were about 25
percent higher than those in the overall counties, and the price per square foot
was about 2 percent higher. In some counties, such as Palm Beach, the median
price per square foot for a golf home was actually lower than the overall