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Golf course communities are a growing segment of the residential market. Premiums have been assumed for those homes fronting a course based on certain perceived benefits of proximity. But golf courses may also throw off negative externalities to the surrounding homes. This study examines the potential negative and positive effects on home prices of golf course frontage and proximity. Using a sample of home sales surrounding a golf course, the authors perform a regression analysis that reveals statistically significant impacts of both types.
Golfing is a major recreational activity and growing business enterprise in the United States. According to the U.S. Bureau of the Census (1992), the number of golfers increased by 147% from 1970 to 1990 with rounds played increasing by 89% (266,169 in 1970, and 502,000 in 1990). The number of golf courses has increased as well. The total number of golf courses-private, municipal, and public daily fee-increased by 25%, from 10,188 to 12,846. The number of daily fee courses, the most prevalent, rose from 4,248 in 1970 to 6,024 in 1990, an increase of 42%.
The number of neighborhoods designed to benefit from proximity to the course are also on the rise. An estimated 80% of all new and planned golf course developments are tied to residential development.l The benefits associated with golf course frontage and proximity thus become a vital concern to appraisers of such residential properties.
Unfortunately, there has been little empirical investigation on the potential impact on value associated with golf courses. Properties within golf course communities may carry premiums of 35%-40% higher than the premiums of similar properties not in golf course communities.2 Of significant interest to appraisers are the property value differences of homes with course frontage versus other properties within the same neighborhood.
Hirsch3 affirms that "significant value can be derived from golf course frontage." Accordingly, Firth4 says that golf course frontage may increase residential land values by over $10 per square foot. A recent study by Do and Grudnitski5 examined golf course frontage using residential sales surrounding three private golf courses in a San Diego, California, suburb. The authors found a premium of about 6%-7% for properties adjacent to the particular course.
Our study gives further evidence of the potential premiums and value losses...