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The Asheville (NC) Citizen-Times has run a story this morning confirming what we broke here last week -– that Cliffs Communities founder Jim Anthony has asked property owners to lend $60 million to his financially strapped organization. The funds would be used primarily to complete amenities at The Cliffs High Carolina and Mountain Park communities. The most publicized amenity at High Carolina is the barely started golf course designed by Tiger Woods.
The Citizen-Times interviewed Mr. Anthony and a Cliffs property owner and published only one line from each.
“’We have bankers and hedge fund guys’ and other property owners with significant resources and financial expertise,” Anthony told the Citizen-Times. “'It was their initiative.'”
Property owner Miller Williams added, “I think the proposal is worthy of consideration by the Cliffs members because it's well understood that the Cliffs needs additional capital to complete its projects at hand.”
A lending proposal is worthy because the money is needed? Sophisticated Cliffs owners are going to need a more evolved rationale than that.
USA Today featured the Wilmington, NC, housing market in its regular “Close to Home” series today. Sales in December in Wilmington were up 19.8% compared with an increase of 18.9% in the state and 12.7% nationwide. Median home prices, however, were down 5.6% from a year ago.
The Wilmington area features more than a dozen golf communities, but only one, Landfall, includes member-only golf, in Landfall's case 45 holes. Landfall’s Jack Nicklaus course (27 holes) is considered by most golfers to be more difficult than its Pete Dye course. Current listings in Landfall range from $290,000 to more than $4 million.
Porters Neck, just north of the city, is also gated but the course is open the public. However, the $100+ green fees keep the riffraff out and give the Tom Fazio course a private-club feel. Current home prices are $300,000 to over $4 million.
Great time for Canadians to buy U.S. golf property, eh
Monday, 08 February 2010 20:08
Canadian real estate prices reached record levels in 2009, and new home starts were up in December to their highest level in 14 months, according to an article in the Wall Street Journal today. Folks who couldn’t get a nibble on their condo a year ago are today finding fevered buyers bidding against each other.
All this positive momentum is starting to prompt fears of a bubble and
We have some ideas for Canadians who are profiting from increasing home prices -- buy golf community property in the U.S.
We have some ideas for Canadians who are profiting from increasing home prices -- buy golf community property in the U.S. consequent price busts in Canada’s housing market. (Those of us who own homes south of the Canadian border know the scenario all too well.) Such fears are prompting some Canadians to pocket their home-sale profits and rent instead. I have a better idea for them, especially if they play golf; buy a nice, cheap vacation home in Myrtle Beach or some other vacation spot we know you love.
Myrtle Beach has long been a favorite play spot for Canadian golfers, and they are welcomed in Myrtle Beach like no other group. Hotels and
Canadians will never be able to play golf and watch a hockey game in February, unless they move to a place like South Carolina.
restaurants in Myrtle Beach fly the Canadian flag outside their establishments in February and March when the winter-addled and golf starved from Toronto and elsewhere are more than happy to don a heavy sweater and hit the links. The Canadian influx is one reason why March is considered "high-season" in Myrtle Beach. It is also when Myrtle Beach hosts Can-Am Days which celebrates the bonds between the two nations -- and the love locally of the Canadian dollar -- with a series of events, including a golf tournament that pits some of Canada’s best junior golfers against some pretty good ones from South Carolina. This year, local Myrtle Beach real estate agents will be missing a great opportunity if they aren’t crawling all over the Can-Am venues, handing out their business cards and flyers of ridiculously low-priced golf community properties.
Except for a few rare days of snow or ice, golf is year round in Myrtle Beach. To all you Canadians who might consider a relocation to the area, think about this for an early February morning with a likely foot of snow on the ground in Toronto: You could play Caledonia Golf Club in the morning and then take a leisurely one-hour drive to the great city of Charleston to watch the East Coast Hockey League champion Sting Rays play. Golf in the morning, and hockey in the evening: Try that in Toronto in February.
Sign of the times: Property owners at high-end, high-amenity communities like The Cliffs could wind up owning equestrian centers and other facilities in the event of developer defaults.
In the early years of the housing crisis, homes at the low end of the market got most of the ink as the media tried to rationalize its ignorance of sub-prime mortgage lending and the irrational exuberance it had fed. But now we can expect more and more reports about troubles at the high end, especially in the wake of The Cliffs Communities request to property owners for $60 million in financing, a story we broke here at Golf Community Reviews.
Many of the properties at The Cliffs, as well as at the ill-fated Ginn Resorts and other upscale
Owners of expensive vacation homes may lie awake at night wondering what to do with their under-water properties.
developments, were designed as trophy homes for wealthy families whose incomes and stock portfolios could justify and sustain multi-million properties. During one of my visits to the Cliffs, for example, a sales agent pointed at one 6,000 square foot behemoth and said it was the owners’ third home, and that they planned to use it for family gatherings about four weeks a year. They paid more than $3 million to build it.
Okay, they had it, they flaunted it. Low interest rates made it easier to finance these vacation spots, either through straight-up mortgages or by dipping into the equity in primary homes to make down payments on the vacation homes. But these formerly wealthy owners are in a tight spot now, as the thought of paying for a lightly used, financially under-water property keeps them up at night. This is why the inventory of high-priced homes in the leisure residential market is growing fast, and prices are dropping.
The law of supply and demand, of course, rules the real estate market, and it is hard to see the top end of the market rebounding anytime
Inventories will remain high at the high end as owners of some expensive vacation homes refuse to settle for true market value offers.
soon, what with a growing inventory of McMansions and the loss of appetite for debt and risk in an uncertain climate. Supply at the high end will remain high for at least the next couple of years as publicity about financial issues, such as at The Cliffs, breeds anxiety, and many owners of homes they bought for $2 million are reluctant to price them at true market value which, in some cases, is 50% of what they paid originally.
That reluctance notwithstanding, extreme bargains are starting to emerge in places like The Cliffs and other high-end communities, with a few foreclosures and short sales sprinkled in to put additional pressure on selling prices (a short sale is one in which the owner arranges with his mortgagee to sell for less than the house is worth). Those who have navigated through the down economy in good shape and have an appetite for a big vacation or retirement home could be looking at homes that cost $300 a square foot to build now available at a price somewhere in the $200 range, or even less.
Tempting though that may be, a bargain price of $1.2 million for a property that originally cost, say,
The safest purchases are likely to be in those high-end communities where amenities were turned over to owners some years ago.
$2 million is no bargain if the developer defaults before all the promised amenities are built. That is why those looking to take advantage of bargains at the high end need to proceed carefully and focus primarily only on communities in which all amenities are in and, ideally, where the owners are in charge of the amenities and maintenance costs are easy to understand and stable.
At The Cliffs, developer Jim Anthony has pledged the golf courses, clubhouses and the community’s other upscale amenities as collateral. Anyone who has visited The Cliffs or lives there knows just how tasteful, sophisticated and richly appointed the equestrian centers, clubhouses, wellness centers and other facilities are. But current and future owners at The Cliffs need to consider that the developer has subsidized those amenities for nearly 15 years. One of The Cliffs’ property owners told me that Anthony has opened his books for a full accounting. As they scrub those books, the owners’ representatives should pay careful attention to just how much it will take, in the event of default, to pay for the lush amenities. In that way, they can assure their fellow residents (future Cliffs bondholders) that the “inheritance” taxes will not put them in an even more precarious position. Future owners who don’t ride horses or work out on expensive fitness equipment should consider seriously how much they want to subsidize such amenities. Those amenities and their host communities aren’t worth what they once were.
If you want more information about The Cliffs or any other communities in the southern U.S., please contact me.
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