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Golf courses caught in crossfire after real estate goes bust

The mid-2000 real estate market crash caught homeowners and businesses in the crossfire. Golf courses were no exception.

About four years after a rash of course closings along the Grand Strand, vacant golf ranges continue to leave a sprawling mark on the landscape and can devalue the condos that are commonly built on courses.

Before the crash, many courses could count on being sold and developed into housing or shopping centers with relative ease, said Bill Golden, president of Myrtle Beach Golf Holiday, a marketing group. For example, Gator Hole Golf in North Myrtle Beach closed in 1999 and became the site of Gator Hole Plaza, a shopping center anchored by Wal-Mart and Home Depot. Most of the closed courses had plans to redevelop as housing complexes.

"Somebody would just come knocking on their door and want to buy that land," Golden said.

Once the market collapsed and no one would buy the land, the courses had little incentive to close. Some courses that had already closed aiming to be redeveloped were caught in the downturn and now sit vacant as well-manicured greens and fairways deteriorate.

And it may be a long time before the courses are resurrected into housing. As cheap, already-built condos flood the market, breaking ground on a new development doesn't make economic sense, said Tom Maeser, an analyst with the Coastal Carolinas Association of Realtors. Banks are also hesitant to lend money for condos, additionally slowing any recovery for the market. New developments might be feasible in about a year and a half - at the earliest, Maeser said.

"Closed golf courses [were] going to build and then the market changes," he said. "The rest of the community gets upset because it looks terrible."

Caught in the wake

The 54-hole Bay Tree Golf Plantation was one unlucky course caught trying to redevelop when the bubble burst. The course in Little River closed in 2006 and was sold to Centex Homes for redevelopment. Although Centex drew up plans for new housing, the company never broke ground and the property was sold once again to the Wakefield Development Co. in 2007.

The development has since stalled, because Wakefield has encountered financial trouble and reduced its property holdings, said Mike Dixon, a former spokesman who declined to comment further. Wakefield could not be reached for comment.

Austin Gormley came to the Grand Strand in 1984 to sell condos as part of the original Bay Tree development, which opened in 1972. The Ireland native continues to rent properties to vacationers under the name Bay Tree Realty & Rentals.

"It's killed my business, the golf course closing," he said.

Slow business led Gormley to put the office up for sale last week, he said.

The overgrown course provides a backdrop for his office, a small white house. The 529 acres has gone to seed with saplings growing on fairways and debris obstructing cart paths. A partially-collapsed results board faces a bare concrete foundation, the only remnant of the course's clubhouse. Liquor bottles litter the area and graffiti is scrawled on buildings. Gormley says that the former course has become a hangout for rowdy teenagers.

The condos around the course have dropped considerably in value, said Jim Kielty, president of one of Bay Tree's six homeowners associations. A condo that was originally bought for $129,000 would now sell for as low as $79,000, he said. Kielty has owned his condo since 2001.

The poor upkeep devalues the property, Kielty said. Developers removed all signs from the course's entrance on S.C. 9 so that it has fallen out of the public eye.

"Nobody knows where Bay Tree is anymore," he said.

Horry County granted the homeowners association a permit last week allowing them to beautify the land along the state road that runs into the complex. They plan to add palm trees and flowers as well as two signs at the development's entrance.

Kielty said the associations will pay for maintenance if Wakefield refuses. The association used to cut the grass on three holes that run between the condos before Wakefield requested they stop, he said. Recent requests to maintain the property have gone unanswered, he said.

Too much of a good thing

The problem began with too many golf courses, according to one analyst.

By the late '90s, the Grand Strand had become saturated with golf courses, Maeser said.

"It's hard to make money on a golf course. You need to have a heck of a lot of rounds," Maeser said. "If the golf course wasn't cash flowing, it made more sense to turn it into lots."

Then, with the real estate crash, the market was flooded with cheap residential properties, including many foreclosures, he said.

The average price on condos continues to decline and about 20 percent of listings are foreclosures, he said. Maeser projects it will be about a year and a half or more before already-built properties sell and demand for new properties returns. Until then, it doesn't make sense to build new condos.

Demand for properties on golf courses may also grow slower than the overall condo market. Condos on golf courses are never in as much demand as those on the ocean or Intracoastal Waterway, he said. Even when the market does catch up, it probably won't return to previous growth rates.

The uncertain market has development plans on hold on the former site of Robbers Roost Golf Club. The North Myrtle Beach course closed in 2003 and there were plans to break ground on an extensive new development in 2009 that would have included stores and housing, said Russell Burgess Jr., a partner in the development.

A bank planned to begin construction on a new branch, but is now waiting to see if the market improves, Burgess said. Several other investors are looking to buy sections of the development but are holding off because of market concerns, he said. Without investors, the land will continue to go undeveloped.

The plan, if it goes ahead, includes condos built on the fairways that now run between the condos of Robbers Roost Villas. The holes, ringed by cart tracks and longneedled pines, have been better maintained than those at Bay Tree, with most of the grass cropped to ankle level.

Ken Robbins retired from a car factory in Georgia and moved into a condo on the course when it was still operating. Although the course has closed, he plans to live out his retirement in the condo, he said. The 77-year-old remembers dodging golf balls while watching the fairways from his backyard.

"I used to sit out back and watch them get mad and throw their clubs," he said.