BOCA RATON, Fla. (Jan. 25, 2017) – While golf courses around the country face an uncertain economic future, 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 percent and 12 percent 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 underperforming 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.”
About Florida Atlantic University
Florida Atlantic University, established in 1961, officially opened its doors in 1964 as the fifth public university in Florida. Today, the University, with an annual economic impact of $6.3 billion, serves more than 30,000 undergraduate and graduate students at sites throughout its six-county service region in southeast Florida. FAU’s world-class teaching and research faculty serves students through 10 colleges: the Dorothy F. Schmidt College of Arts and Letters, the College of Business, the College for Design and Social Inquiry, the College of Education, the College of Engineering and Computer Science, the Graduate College, the Harriet L. Wilkes Honors College, the Charles E. Schmidt College of Medicine, the Christine E. Lynn College of Nursing and the Charles E. Schmidt College of Science. FAU is ranked as a High Research Activity institution by the Carnegie Foundation for the Advancement of Teaching. The University is placing special focus on the rapid development of critical areas that form the basis of its strategic plan: Healthy aging, biotech, coastal and marine issues, neuroscience, regenerative medicine, informatics, lifespan and the environment. These areas provide opportunities for faculty and students to build upon FAU’s existing strengths in research and scholarship. For more information, visit www.fau.edu.