Club Trends Magazine – January 2021

Will Golf Community Residential Real Estate Sales Continue to Strengthen in 2021?

By: Jason Becker, CEO of Golf Life Navigators & Michael Timmerman, Chief Market Intelligence Officer of Club Benchmarking

It’s no surprise, real estate sales are dominating the media outlets these days as consumers are seemingly flocking from large, populated cities and into suburbs with more space – and even as far as moving to another state.

But, what impact has this had on residential golf communities? Moreover, will the current trends offer us a confident look at what 2021-22 might bring to the club industry?

This article will discuss the current real estate trends and buyer sentiment for private club memberships in the Sunbelt – and offer our interpretation of what the trends might mean for the industry. We do stress one important item before reading on – it’s a fluid world these days and the events of 2020 will shape the buyers behavior for many years. We encourage you to view the data and use as fodder for discussion with your Board and team members so that it may help you posture the club for 2021.

Before we dive into the latest real estate data, we believe it is important to define two distinct types of club communities – Non-Residential Club Communities vs. Residential Club Communities:

Non-Residential Communities Clubs (NRCC) included gated and non-gated communities that may offer lifestyle amenities but do not have a golf component. The community amenities are owned and maintained by the HOA.

Residential Community Clubs (RCC) are self-contained, private gated communities that offer golf and other lifestyle amenities within the community. Membership to the club may or may not be mandatory.

Residential Housing Trends for Southwest Florida

Since April of this year, we recently surveyed several residential community clubs countrywide to measure real estate activity. The data below is from the MLS system in Southwest Florida since January of 2020 and includes Naples and Ft Myers, FL. The trends are indexed to 100 to provide a normalized comparison between NRC and RCC in this market. In the following charts, NRC communities are represented by the Blue lines and RCC are represented by the Orange lines.

The data below reflects the inventory change between the two community categories. We can see the shortage of inventory is evident in both community types.

Our interpretation: Clearly, Covid-19 had a major impact on the real estate industry with relation to potential sellers putting their homes on the market. However, to add another negative force to the equation, Golf Life Navigators’ buying trends data in June was showing 79% of first-time club buyers to the Sunbelt said they planned to delay their search due to a series of reasons but primarily Covid-19 and the economic outlook. In addition, 85% of multi-club buyers also planned to delay their search for the same reasons mentioned above. With a reduction in new listings, the marketplace for those buyers who remained active for a club and real estate began to increase in pricing and why stories began to swarm about consumers buying Sunbelt homes sight-unseen.

The data below reflects pending sales change between the two community categories. We see a drop in pending sales for both categories in April, with a steady increase to November. Since July, we see the pending sales trends between the two communities converging, with RCC trends outpacing sales in NRCC.

Our interpretation: In October, Golf Life Navigators released another survey to the same buyers who participated in the June survey. A number of positive trends appeared which correlates to Club Benchmarking’s real estate data.

1.) Only 63% of first-time club buyers are continuing to delay their search – this a 15% decrease from June. For the multi-club buyers, only 71% plan to continue with the pause of their search, which is also a 13% decrease from June.

2.) For those buyers who would like to live inside the gates of a club community, 64% say that they are now focusing on purchasing a home in the gates of a residential community.

This is a dramatic increase from 51% of buyer sentiment pre-Covid. Why? Buyers are putting more value on safety, secured/controlled environments and the ability to be “in a bubble” with amenities available – should another pandemic occur. “Golf and Tennis is on the rise and living in a safe environment is the key to the buyers motivation” Tim Bakels- General Manager, Colleton River Club, Bluffton, South Carolina.

The data below reflects the change in Sales Volume between the two communities. We again see the drop in both categories in May, reflecting the decline in activity in April. Since May, however, we see a steady increase in sales to November, with RCC sales outpaced the NRCC sales, and we expect the trend to continue based on the Pending sales leading indicator.

“Our sales have increased to the 2nd best year in the past 12 years, despite being closed for 3 months. Buyers are fearing a long winter lockdown and feel safer outdoors which is evident in the increased activity of all outdoor activities. Our F&B activity has increased due to the convenience of “order to go meals” from the club. We could not be more pleased” – John Jorritsma – Director of Sales and Marketing, The Club at Ibis, West Palm Beach, FL.

The data below reflects the change in Median Price between both communities. Price is rising due to the high demand, limited inventory and the appeal of this market. The pricing index between the two community types has accelerated since July, with RCC club pricing growing at a faster pace.

Our interpretation: Certainly, one can argue that we are in a sellers-market for residential club community homes. Consumer buying data supports this trend as Golf Life Navigators has seen an increase in more buyers combining their search of club with a home – up to 72% of all buyers in the marketplace. In addition, 88% of buyers plan to play more golf in the future (up 11% since the June survey) and 38% of buyers plan to expedite their search/purchase due to the following factors: low interest rates, growing market demand of club community homes, escaping large northern cities, moving to a tax friendly state and the ability to now work remotely.

“Between the dynamics of the recently completed golf course and clubhouse renovations and consumers’ motivations to move up their second home club and real estate decision, we have flourished. Club memberships and real estate sales are up, and we have increased our initiation fees with no resistance.” – Bob Radunz – General Manager/COO The Quarry Golf Club, Naples, Florida.

In conclusion, the question remains: Will we continue to see these trends through-out 2021 if Covid-19 is lingering? Will buyers still have a desire to buy into residential club communities with the same sentiment? Our sense is “yes” to both.

The Covid-19 pandemic has given us a lot to think about in terms of how to market our clubs to buyers, especially to those buyers who have a focus on real estate. The dynamics of the virus have given way to the creation of demand for residential club community homes, which has significantly increased in pricing. Our suggestion, monitor your local real estate market and pay special attention to the condition of home being sold inside your gates. We believe these trends will not slow down anytime soon so embrace what the wake of Covid-19 has given us and posture the club appropriately to satisfy club/real estate buyers.