[EconProf]

ocrenter and clearfund raise some interesting points about the Santaluz golf club membership that prompt ruminations about how things have changed so radically in the past decade. Golf/membership clubs are reportedly in trouble nationwide, as baby-boomers age and golf less, expensive sports are shunned with our nation’s newfound austerity, and land and water rates rise.
Consider also the particular economics of a golf course: heavy up-front fixed costs, low marginal or variable costs (the cost of each additional user). This means the enterprise cannot thrive without volume, and in fact may have a breakeven point of perhaps 70% or 80% of capacity. Usage of both clubs is way below their potential, as we have observed.
Since Santaluz was conceived and planned in the heady post-stock market peak of 1999, and executed in the real estate bubble of 2000-2005, they assumed their expensive memberships would always have high and increasing demand, thus their lofty initial asking price. Now the gloom of our post-bubble economy is becoming permanent, some 10% + building pads of Santaluz sit vacant (and are selling for less than their initial 2003 or so price), and the membership prices have been cut, much to the chagrin, I suppose, of the original buyers. I imagine a lot of internal debate and gnashing of teeth preceeded this decision.
I suggest this is the new normal and a slew of other enterprises must rethink their business model in view of a permanent slow growth economy.

[EconProf]

ocrenter and clearfund raise some interesting points about the Santaluz golf club membership that prompt ruminations about how things have changed so radically in the past decade. Golf/membership clubs are reportedly in trouble nationwide, as baby-boomers age and golf less, expensive sports are shunned with our nation’s newfound austerity, and land and water rates rise.
Consider also the particular economics of a golf course: heavy up-front fixed costs, low marginal or variable costs (the cost of each additional user). This means the enterprise cannot thrive without volume, and in fact may have a breakeven point of perhaps 70% or 80% of capacity. Usage of both clubs is way below their potential, as we have observed.
Since Santaluz was conceived and planned in the heady post-stock market peak of 1999, and executed in the real estate bubble of 2000-2005, they assumed their expensive memberships would always have high and increasing demand, thus their lofty initial asking price. Now the gloom of our post-bubble economy is becoming permanent, some 10% + building pads of Santaluz sit vacant (and are selling for less than their initial 2003 or so price), and the membership prices have been cut, much to the chagrin, I suppose, of the original buyers. I imagine a lot of internal debate and gnashing of teeth preceeded this decision.
I suggest this is the new normal and a slew of other enterprises must rethink their business model in view of a permanent slow growth economy.

[EconProf]

ocrenter and clearfund raise some interesting points about the Santaluz golf club membership that prompt ruminations about how things have changed so radically in the past decade. Golf/membership clubs are reportedly in trouble nationwide, as baby-boomers age and golf less, expensive sports are shunned with our nation’s newfound austerity, and land and water rates rise.
Consider also the particular economics of a golf course: heavy up-front fixed costs, low marginal or variable costs (the cost of each additional user). This means the enterprise cannot thrive without volume, and in fact may have a breakeven point of perhaps 70% or 80% of capacity. Usage of both clubs is way below their potential, as we have observed.
Since Santaluz was conceived and planned in the heady post-stock market peak of 1999, and executed in the real estate bubble of 2000-2005, they assumed their expensive memberships would always have high and increasing demand, thus their lofty initial asking price. Now the gloom of our post-bubble economy is becoming permanent, some 10% + building pads of Santaluz sit vacant (and are selling for less than their initial 2003 or so price), and the membership prices have been cut, much to the chagrin, I suppose, of the original buyers. I imagine a lot of internal debate and gnashing of teeth preceeded this decision.
I suggest this is the new normal and a slew of other enterprises must rethink their business model in view of a permanent slow growth economy.

[EconProf]

ocrenter and clearfund raise some interesting points about the Santaluz golf club membership that prompt ruminations about how things have changed so radically in the past decade. Golf/membership clubs are reportedly in trouble nationwide, as baby-boomers age and golf less, expensive sports are shunned with our nation’s newfound austerity, and land and water rates rise.
Consider also the particular economics of a golf course: heavy up-front fixed costs, low marginal or variable costs (the cost of each additional user). This means the enterprise cannot thrive without volume, and in fact may have a breakeven point of perhaps 70% or 80% of capacity. Usage of both clubs is way below their potential, as we have observed.
Since Santaluz was conceived and planned in the heady post-stock market peak of 1999, and executed in the real estate bubble of 2000-2005, they assumed their expensive memberships would always have high and increasing demand, thus their lofty initial asking price. Now the gloom of our post-bubble economy is becoming permanent, some 10% + building pads of Santaluz sit vacant (and are selling for less than their initial 2003 or so price), and the membership prices have been cut, much to the chagrin, I suppose, of the original buyers. I imagine a lot of internal debate and gnashing of teeth preceeded this decision.
I suggest this is the new normal and a slew of other enterprises must rethink their business model in view of a permanent slow growth economy.

[EconProf]

Earlyretirement, you’ve already mentioned the biggest Santaluz flaw–the 5-figure entry fee + $200/mo cost of joining the club that would enable us to use the gym, pool, coffee shop. Most of us residents haven’t joined and would if the price were lowered. Some day they will discover the concept of elasticity of demand and cut the price in half, double their membership, and bring in the same total revenue.

[EconProf]

Earlyretirement, you’ve already mentioned the biggest Santaluz flaw–the 5-figure entry fee + $200/mo cost of joining the club that would enable us to use the gym, pool, coffee shop. Most of us residents haven’t joined and would if the price were lowered. Some day they will discover the concept of elasticity of demand and cut the price in half, double their membership, and bring in the same total revenue.

[EconProf]

Earlyretirement, you’ve already mentioned the biggest Santaluz flaw–the 5-figure entry fee + $200/mo cost of joining the club that would enable us to use the gym, pool, coffee shop. Most of us residents haven’t joined and would if the price were lowered. Some day they will discover the concept of elasticity of demand and cut the price in half, double their membership, and bring in the same total revenue.

[EconProf]

Earlyretirement, you’ve already mentioned the biggest Santaluz flaw–the 5-figure entry fee + $200/mo cost of joining the club that would enable us to use the gym, pool, coffee shop. Most of us residents haven’t joined and would if the price were lowered. Some day they will discover the concept of elasticity of demand and cut the price in half, double their membership, and bring in the same total revenue.

[EconProf]

Earlyretirement, you’ve already mentioned the biggest Santaluz flaw–the 5-figure entry fee + $200/mo cost of joining the club that would enable us to use the gym, pool, coffee shop. Most of us residents haven’t joined and would if the price were lowered. Some day they will discover the concept of elasticity of demand and cut the price in half, double their membership, and bring in the same total revenue.

[EconProf]

A couple of Santaluz negatives to watch out for: The area west of Del Sur is much different from the area on the east side in terms of density. They have streets cluttered with vehicles as a result. Also, beware of getting any house near to Del Sur as it is quite noisy since speeds are going up there and traffic increasing–they are now expanding that part of Del Sur north of San Diguito Road to four lanes from two.

[EconProf]

A couple of Santaluz negatives to watch out for: The area west of Del Sur is much different from the area on the east side in terms of density. They have streets cluttered with vehicles as a result. Also, beware of getting any house near to Del Sur as it is quite noisy since speeds are going up there and traffic increasing–they are now expanding that part of Del Sur north of San Diguito Road to four lanes from two.

[EconProf]

A couple of Santaluz negatives to watch out for: The area west of Del Sur is much different from the area on the east side in terms of density. They have streets cluttered with vehicles as a result. Also, beware of getting any house near to Del Sur as it is quite noisy since speeds are going up there and traffic increasing–they are now expanding that part of Del Sur north of San Diguito Road to four lanes from two.

[EconProf]

A couple of Santaluz negatives to watch out for: The area west of Del Sur is much different from the area on the east side in terms of density. They have streets cluttered with vehicles as a result. Also, beware of getting any house near to Del Sur as it is quite noisy since speeds are going up there and traffic increasing–they are now expanding that part of Del Sur north of San Diguito Road to four lanes from two.

[EconProf]

A couple of Santaluz negatives to watch out for: The area west of Del Sur is much different from the area on the east side in terms of density. They have streets cluttered with vehicles as a result. Also, beware of getting any house near to Del Sur as it is quite noisy since speeds are going up there and traffic increasing–they are now expanding that part of Del Sur north of San Diguito Road to four lanes from two.

[EconProf]

earlyretirement, it sounds like you have scoped out Santaluz pretty well. I’ve met the visionary architect who conceived it a decade ago when he explained his philosophy in a speech a year ago. It really will not be replicated this close to the coast because it is so low density and gated–two trends the planning authorities are discouraging.
The CC&Rs are wickedly demanding and bug some people who didn’t know they were giving up certain freedoms to live in Santaluz. You can’t paint your house non-approved colors, or change the architecture except in specified way while going through an expensive vetting process, or park a company pickup or van in your driveway, or have a barking dog, or leave your garbage bin out more than 48 hours, or put it anywhere in your yard visible from the street, or park your car in the street overnight (in parts of Santaluz), or have bright outdoor lights. On the latter point, Santaluz is a “dark sky” community, so driving around or taking walks at night is a unique experience. Not many places in San Diego can you truely see the moon and stars. My wife and I love all these restrictions–but they are clearly not for everyone.

[Author]

Posts