Liquid Assets: Water Views Command 100% Premium

Some communities where you can take the plunge

Real estate, of course, is valued on three basic principles:  Location. Location. Location.  A golf community abutting a large and beautiful lake or rubbing up against the ocean commands higher property prices than one with more mundane natural features. And inside any golf community, there exists a well-established hierarchy of prices between and among properties surrounded by trees, facing the golf course or with water views.  Values within the boundaries of a golf community are all about the views.

Most golf communities in the Southeast feature at least some body of water inside their boundaries.  Inland, it is typically a lake or river.  On the coast, it is the ocean, the marshland of the Lowcountry, or perhaps a river.  In the western sections of the Carolinas, eastern Tennessee and upstate Georgia, the dominant topography is mountains, sometimes with a lake and sometimes not.  It is rare to find a golf community lacking any of these topographical features, but when you do find one devoid of such features, you will also find substantially lower real estate values.

Liquid Gold

Despite the recession’s effects on luxury-property view values, water views command the highest prices of any natural feature, and by a large factor.  Before the recession of 2008, I always asked my hosts at golf communities I visited to provide me an estimate of average prices for properties with water views, golf views and those referred to typically as “interior” lots (code word for no view other than woods, if that).  And almost universally, the premium for a golf view property was 20% or more than an interior lot, and the premium for a water view lot, depending on whether that water was marsh, lake or ocean (by far the most expensive), could be many multiples of the price of a wooded-only lot.  The price ratios are not consistent community to community as the recovery from the recession continues, but water is still the most precious commodity in terms of home sites.

Few of us would turn down a commanding water view if money were no object.  But some water view lots are priced on a par with a Fifth Avenue apartment in Manhattan.  For example, in a private golf community like DeBordieu Colony in Georgetown, SC, 40 minutes south of Myrtle Beach, an oceanfront lot with 100 feet facing the beach is listed today for $2.6 million.  (Add another $1 million at least to build a suitable home.)  Another DeBordieu lot within an easy walk of the beach and with a view of a small lake is priced at $298,000.  The lowest priced lot in DeBordieu currently is listed at $90,000 and is mostly surrounded by trees, although there is a corner of a small lake abutting the back of the property.  (Yes, we know that most homes are sold for less than the listed price, but the ratio between water, golf and interior lots tends to be consistent.)

Just up the coast from DeBordieu on Pawleys Island, oceanfront homes are priced from about $1.3 million to $3.5 million (no golf community).  Across the street, in the “2nd row,” maybe only 20 yards farther from the beach, homes are priced from $529,000.  The difference is somewhat like sitting in the box seats rather than the bleachers in a stadium; you can enjoy the game no matter where you sit, although you will pay a lot more for a closer view of the action. 

Making No Waves

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If you don’t mind the more placid nature of lake views (no waves), you will pay a lot less for them than for ocean views, sometimes dramatically so.  As we have written before, the 30-year-old golf community of Keowee Key in Salem, SC, offers some astounding buys for waterfront properties, including a current townhome on the lake priced at about $70 per square foot.  Located on Lake Keowee in rural South Carolina, about 20 minutes from Clemson University, the difference between lots on the waterfront at Keowee Key and “interior” lots is significant, according to sold data supplied by Bob Hill of Bob Hill Realty. Between 2003 and 2015, the average sold price of lake view lots by the Hill agency was $137,000 for those with a conventional loan attached, and just $116,000 for those that were all-cash transactions.  The sold prices of interior lots, including some with golf views, during that same period was just $24,000 and $16,500, respectively.  The water views commanded prices about six times more than for the interior lots.

At Savannah Lakes Village in rural McCormick, SC, lots facing directly onto Lake Thurmond are every bit as low priced as at Keowee Key.  One with an unimpeded walk through the woods to the lake is priced currently at just $5,000, but the more “normal” pricing for lake views begins around $20,000.  The most expensive lot in Savannah Lakes is a beauty, located on a point, with 300 feet of shoreline looking across water to the Monticello golf course, and another 160 feet looking down the channel.  At $395,000 for more than one acre of waterfront land, it could be the site of a dramatically situated home that, overall, costs less than $1 million.  (That compares with similarly sited homes in more upscale lake golf communities that surpass $2 million and more.)  By contrast, I counted 31 golf course lots priced below $40,000 and no golf course lot priced above $150,000.  As for “wooded” lots in Savannah Lakes, the most expensive is priced at $46,000 and the least at $5,000.  Including an estimated $125 per square foot construction costs for granite, some hardwood floors and nice cabinetry, one could build a dream home of 3,000 square feet there for around $400,000.

Developers take advantage of the wild differences in perceived values, and they price water view lots accordingly, especially in well-established golf communities.  At The Reserve at Lake Keowee, for example, one “lakeside” lot is currently priced at a reasonable $99,000 but, on closer inspection, the lot has a limited view of the lake beyond what will eventually be homes across the street.  Those lots across the street, directly on the lake -– actually a cove of the lake –- are on offer for $425,000 to $450,000.   (One home already built on that stretch of lake is available for $1.9 million.)  Lots with cove views elsewhere in the community begin around $200,000.  The Reserve’s euphemistically named “conservancy” lots scattered about the community start as low as $50,000 and some have views of the Jack Nicklaus golf course; the prices seem reasonable when compared with the eight-times-more-expensive water lots.  The challenge that The Reserve and other lake-based communities face is to price the lake lots high enough that they don’t sell out before most golf view and interior lots are sold, but not so high to suggest that, overall, the community is only for a wealthy few.  Once they sell out of waterfront lots, it becomes a harder marketing challenge for a golf and lake community to sell the other lots.

Marsh Ado About Nothing?

Most of my customers prefer coastal locations to inland ones.  In the Lowcountry from around Myrtle Beach to northern Florida, “coastal” means mostly marshland.  Yet many who prefer water views don’t consider marshland “water,” although at high tide the marsh can resemble a large lake with reeds growing out of it.  (And at certain times of the year and under certain sunlight conditions, those reeds become beautiful fields of heather-colored wheat or large verdant meadows.  You can tell how I feel about the marsh.)  The problem for some is that, at low tide, the marsh resembles a mud swamp.  (Locals refer to it as “pluff (plough) mud,” and what Charleston magazine once described as “the mother sauce of all things Lowcountry.”)  If you can’t love, or learn to love, the sauce -– yes, there are unique smells associated with it, but nothing an oyster lover can’t get used to -- then our advice is to steer clear of the area of the coast from north of Myrtle Beach to Florida.  Otherwise, it is as close as you will get to the ocean for less than seven figures.

If you are open to a landscape that changes four times a day, that is teeming with wild creatures from marsh deer to oysters, and serves as the backdrop for some of the best golf in the world, you will have options galore at a wide range of prices. In Pawleys Plantation, for example, home sites with views of the ½ mile wide marsh that separates the community from the Atlantic Ocean beach begin at $160,000; that buys a site that includes a look across the Jack Nicklaus designed par 5 14th hole.  Resale homes with marsh views begin just under $500,000.  For comparison, $70,000 will purchase an interior lot in Pawleys Plantation that can accommodate a patio style home.  Just down the block is a 3-bedroom, 2-bath, 2,200 square foot home currently listed at $314,900.  The premium for a marsh-view home in Pawleys Plantation is on the order of 50% or more.

At The Landings near Savannah, the least expensive marsh view home, with 3 bedrooms, 2 full bathrooms and 2 half bathrooms, is listed at $419,000.  A wooded-view home of essentially the same size is priced at $269,000, or about 36% less than the marsh view home.  A comparably sized home facing one of The Landings’ six golf courses is listed at $299,000 and has the added benefit of a lagoon view as well.  However, the home is 33 years old and the listing description that the home is waiting for new owners to apply “a few personal touches” signals that some additional investment will be required.  At the high end inside The Landings, the most expensive wooded home is priced at $1.7 million; the most expensive golf view lot is $1.95 million; and the most expensive marsh view is priced at $2.4 million.

A View to a Thrill

The hierarchy of the most desirable views in golf communities is consistent, no matter the geography.  At the top is water, and the most treasured water view is of the ocean.  Without the ocean, inland golf communities command their highest prices for long lake views and, if the community is at some altitude, long-range mountain views.  Somewhere in the middle of the hierarchy of prices are golf course lots, whose typical values are around half those of the water views and generally on the order of 20% to 30% above prices for wooded lots.  Those wooded lots may be the least prized but they do afford many people the opportunity to buy into a golf community that might otherwise be a stretch for them.  And once in place, you can always walk or bicycle to the water.  Moreover, if you make friends easily, you can wangle an invitation to one of those multi-million dollar homes with a killer view.  Chances are their owners didn’t pay the high price just to enjoy the view themselves. 

Larry Gavrich

Founder & Editor
Home On The Course, LLC