Saturday, November 26, 2011

worth reading California Dreaming

I don't have to tell anyone who's landed on this blog that the golf business in the United States is in a world of hurt these days.

The reason, in large part, is that golf communities -- the main driver of golf development in recent decades -- have become an endangered species. When houses can't sell at even depressed prices, the nation's home builders can't afford to build and maintain multimillion-dollar golf courses.

Can U.S. golf construction thrive without a flourishing housing industry? And do home builders still need big-ticket amenities like golf courses to attract buyers?

Those were among the questions floated by home builders and golf consultants at a recent symposium outside Palm Springs, one of the most desirable areas of Southern California. Here's how one of the area's newspapers, the Desert Sun, covered the event:

The future of the Coachella Valley's golf course communities and private clubs is about as certain as a duffer's tee shot. . . .

The economic slump and painfully slow recovery and other factors have sapped club memberships, trimmed golfer rounds, and dramatically knocked down home prices across the valley and nationwide, said Rick Coyne, CEO of Club Mark Corp., which counsels private clubs nationwide from offices in Palm Desert and Dallas.

Somewhere between 8,000 and 12,000 golf club memberships are available valley-wide, which if sold would provide valuable revenue to maintain some 120 desert golf courses and clubs. . . .

The financial slide for many golf communities and clubs is part of a nationwide trend, Coyne said, as 620 golf courses have closed down in the past five years. New course openings have dropped 63 percent.

Among reasons are an aging population and a general “cultural shift,” as members of Generation X think differently from their parents.

“The cracks in the foundation -- they haven't happened overnight,” Coyne said. “We need to look at things differently.” . . .

V. R. “Pete” Halter, chairman of The Halter Companies, which advises clients on strategic planning for home developments, said part of the problem for golf communities and clubs is the loss of the “wealth effect” that is both psychological and very real.

Many second-home buyers who had discretionary or real wealth have lost 30-35 percent of that wealth in stocks or the value of their homes and businesses in recent years, Halter said.

At the same time, home defaults have forced some golf communities to raise maintenance fees even as many homeowners have less ability to pay them.

The changing industry dynamics have forced more developers to rethink whether golf courses are a must for their master-planned communities amid changing buyer demographics. . . .

Speakers said prospective members often walk away from aging clubs that have a feel of the 1960s.

Halter said one of the valley's challenges will be competing with newer resorts and courses and keeping down the “post-purchase shock,” or costs such as club dues, HOA, and maintenance fees.

“How do you reinvent what Palm Springs is in the minds of the consumer?” Halter asked.