How Much Does Living Close to a Golf Course Add to Property Values?

May 21, 2020, Department, by John L. Crompton, Ph.D.

2020 June Finance for the Field Golf Course Property Values 410

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In a recent article in the Journal of Park and Recreation Administration, Sarah Nicholls, a professor in the department of business at Swansea University’s School of Management, and I reviewed 21 studies that measured the impact of golf courses on property values. They were all published in peer reviewed journals, which provided assurance that the research techniques producing the results were sound. Our review showed the impact of golf courses was different from that of parks in two ways.

First, access to golf courses by non-golfers, who would like to engage in such activities as walking, jogging, sitting or daydreaming, typically is aggressively discouraged. Hence, there is relatively little benefit to be gained from living proximate to a course unless there is a view of it. As a result, almost all the premium is confined to those residences fronting onto a golf course. This contrasts with the impact of parks, which in the April issue of Parks and Recreation was reported to extend out to 500–600 feet (about three blocks), and for larger parks the influence tended to extend to approximately 1,200 feet.

Second, the review of the impact of parks reported that, in some instances, premiums on residences two or three blocks distant from a park were higher than those for residences adjacent to a park. This finding reflected nuisances experienced by adjacent residences, such as congestion, street parking, litter or vandalism, intrusive ballfield lights and engaging in morally offensive activities. The absence of these nuisances from a golf course contributes to the premium for residences abutting a course.

The premiums primarily reflect views. Frontage properties embrace the concept of ‘appropriation’ that was articulated by Humphry Repton, one of the pioneering ‘fathers’ of landscaping in the early 1800s. Appropriation is the view of the landscape that is visible from a residence that effectively integrates a view into the resident’s private property, even though it is not part of the property.

Frontage golf course premiums typically averaged between 15 percent and 30 percent, which is much higher than the 8 percent to 10 percent typically associated with properties fronting onto passive parks. Premiums are almost all attributable to the location of a lot rather than to residences constructed on a lot, because the cost of building a given house in a community is likely to be approximately the same irrespective of where it is located. This means that when premiums are expressed as a percentage, there is likely to be a substantial difference between those of undeveloped lots and those of built-out developments. Consider the following:

  • Prime Frontage: Lot cost, $250,000; House cost, $400,000; Total cost, $650,000
  • Interior Lot: Lot cost, $100,000; House cost, $400,000; Total cost, $500,000

In this example, the premium for the vacant lot is 150 percent ($250,000/$100,000), but the premium when the lot is developed is 30 percent ($650,000/$500,000).

Frontage premiums are not all the same magnitude. The evidence suggests that those for ‘ordinary’ fairway lots are approximately half those for ‘prime’ fairway lots with extended views (e.g., 180, 360) or prized views (e.g., water features and/or greens).

Premiums tend to be relatively low for municipal courses and relatively high for private courses. This is mainly attributed to differences in the quality/exclusivity of the courses, and the negative impact of more rounds/players on properties adjacent to municipal courses.

Course configurations may also influence premiums. Long-established ‘core’ courses that were constructed by municipalities or private clubs to provide opportunities for golfers to play the game without regard to their impact on real estate are likely to have relatively small premiums. In contrast, premiums for courses in golf communities that are intentionally threaded around real estate and designed to create attractive viewscapes are likely to have relatively high premiums.

Frontage premiums are dependent on high-quality maintenance of the course. However, this prerequisite is under threat in some communities, because more than 1,200 golf courses in the U.S. have closed since 2003, often leaving abutting homes looking at unkempt open space, rather than manicured, attractive green space. The closures have resulted from an over-supply of courses constructed in the latter decades of the past century, and a decline in both the number of people playing golf (from 30.6 million in 2003 to 24.2 million in 2018) and the number of rounds played (from 518 million in 2000 to 434 million in 2018).

John L. Crompton, Ph.D., is a University Distinguished Professor, Regents Professor and Presidential Professor for Teaching Excellence in the Department of Recreation, Park and Tourism Sciences at Texas A&M University and an elected Councilmember for the City of College Station.