The Impact on Property Values of Golf Courses in the United States

Abstract

Between 2005 and 2017, the net number of 18-hole equivalent courses in the U.S. declined by 1,063. In recent years, the closure rate of courses has been approximately 200 a year, resulting in potentially substantial losses in property values for residents who have paid a premium to reside in proximate locations to them.

Findings from 21 studies suggested eight managerial and research insights. First, there was a rapid decrease in the premiums accruing to properties located one or two blocks away from fairways that lacked a view of the course. Second, with only one exception, all studies in the review treated “frontage properties” as a homogeneous variable, which is oversimplistic. Third, most of the analyses bundled all types of golf courses into a single generic variable which assumed the same premium was associated with all of them, but quality of courses, and hence premiums, are likely to increase with their level of exclusivity. Fourth, vacant lot premium percentages ranged from 39%-85% and were much higher than those of developed lots. 

Fifth, premiums in three of the four studies reviewed that focused on single courses were substantially larger than those in studies that incorporated multiple courses. If all else is equal, it seems likely that single course analyses provide a more accurate picture of fairway premiums, because studies that incorporate multiple golf courses report an average premium across all of them and averages hide variations. Sixth, most recent studies included golf courses as one of multiple amenities in mega studies in expansive geographical areas. This means their premiums were represented by a single mean value, which is inappropriate because it hides wide variations. 

Seventh, studies incorporating many golf courses that measured the distance of all properties in the sample to the nearest golf course typically reported low premiums. This reflected the inappropriateness of the measure, since it included many properties located many miles from a golf course. Finally, none of the studies considered the likelihood of different premiums being associated with different course configurations. It seems likely that small premiums would be associated with long-established core courses constructed by municipalities or private clubs to provide opportunities for golfers to play the game without regard for their impact on real estate. In contrast, premiums for courses in golf communities intentionally threaded around real estate and designed to appeal to large numbers of non-golfers by creating green viewscapes are likely to have relatively high premiums. 

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