Buy Land Now, Build Later & Hedge Against Price Increases
By Larry Gavrich, Founder & Editor,
Home On The Course, LLC
Thanks to low inventories, a generally improving economy and more stable employment numbers, the dozens of golf communities I follow saw significant real estate price increases in 2017. Most golf homes in high quality communities increased in price by about 8%, but in golf communities with high demand and especially low inventories, the increases ranged as high as 15% and more.
If these price trends continue at a similar pace in 2018, a home that sold for $300,000 at the beginning of last year could rise in price to $350,000 or more by the end of this year. Couples who have a few years to go before retirement and a move south could see their buying power eroded significantly as they wait to buy a home in which to spend their golden years.
These couples have options as limited as their budgets might be. One option is to give up their plans and stay in place for the foreseeable future. But that, of course, means enduring continuing cold winters and a significantly higher cost of living than they will find generally in the Carolinas. Another option is to cobble together as many funds as they can and buy a vacation home somewhere in the Carolinas where they could see themselves moving permanently in the future. That will help secure some of their buying power as their vacation home value rises in tandem with the rest of the local market. But such an investment might not fit with prudent pre-retirement financial planning.
One last option could be the best: Buy dirt. Land is still relatively cheap in many areas of the Carolinas and the rest of the South. For a relatively small investment, a couple can acquire a homesite today, pay very low carrying costs in the intervening years, and build on their site when the time is right.
Some homesites in otherwise excellent communities are almost laughably low-priced today, despite the increase in the prices of existing homes in the same community. In Savannah Lakes Village in McCormick, SC, for example, a homesite located behind a green on one of the golf courses is more than a half-acre in size, comes with free golf club membership and homeowner association dues of just $110 per month, and is priced at just $9,900, although its value for tax purposes is $35,000. Annual taxes are about $500.
There are a variety of other homesites available at Savannah Lakes, including those with dock permits on adjacent Lake Thurmond and a short walk to the lake for less than $5,000. Savannah Lakes is home to two excellent golf courses and one of the lowest-priced and most flexible amenities programs anywhere.
Though it is a few thousand acres in size and home to more than 2,000 residents, Savannah Lakes Village is rather remotely located, a good 30 minutes from the small college town of Greenwood, SC. (Outdoor enthusiasts who love boating and golf might suggest it offers the perfect set of amenities.) But some golf communities in areas closer to a range of services also offer sharply priced homesites.
In Ocean Ridge Plantation, a mature community of four well-regarded golf courses halfway between Myrtle Beach and Wilmington, NC, many sites are available priced under $25,000. Homes in Ocean Ridge, located just a few miles from the ocean, are currently listed for sale from $340,000 to $860,000, making those $25,000 sites look quite reasonable. (Although construction costs can range widely from one area to another, $150 per square foot is a good rule of thumb in most locations.)
Dirt is as cheap as $1 in some of the premier golf communities in the Carolinas. In Bluffton, SC, for example, just off Hilton Head Island, listings of homesites for sale in the upscale communities of Colleton River Plantation and Belfair Plantation show a combined one dozen home sites priced at $1 each. The question is begged: Why? The answer is that these communities, like others in the Carolinas, impose mandatory golf memberships; that is, all property owners – of built homes or unimproved lots – are required to join the golf clubs and pay monthly dues. This may seem onerous, but consider that during the recession, as other country clubs struggled, those with a relatively steady source of income from dues survived quite well.
Still, the overall carrying costs at Colleton River and Belfair include not only membership fees but also homeowner association dues attached to each property that can approach a total of $20,000 per year. But for those near retirees who can afford to pay the fees for a couple of years before building a home, the overall cost to build can be substantially lower than buying an existing home. (By the way, those $1 homesites were originally priced pre-recession for as much as $450,000 each until their speculating owners could no longer afford the year after year carrying costs.) Colleton River and Belfair offer a combined 81 holes of splendidly conditioned golf by the likes of Jack Nicklaus, Pete Dye and Tom Fazio.
Here are a few samples of inexpensive homesites in some of the Carolinas’ top golf communities:
Kenmure Country Club, Flat Rock, NC – almost 3 acre wooded site with city water at 2,500 foot elevation … $29,900
Mount Vintage Plantation, North Augusta, SC – 2/3 of an acre at greenside of one of the community’s 27 holes of golf. One of a half dozen lots priced under $30,000 … $24,000
Keowee Key, Salem, SC – almost ½ acre with golf course view from back and side of lot. Count on less than $150 per square foot to build … $3,975
Wolf Laurel, Mars Hill, NC – just a hair under one acre in a combined golf and ski community about 35 minutes from the famed Asheville, NC. Homesite faces west for afternoon sun and provides some nice winter views of the distant mountains … $2,900
Whatever option makes the most sense for those considering a move South after retirement, a patch of dirt today could pave the way for more purchase power in the years to come.
Author’s Note: If you are interested in more examples of homesites for sale throughout the Carolinas or elsewhere in the Sunbelt, feel free to contact me at email@example.com.
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