Permit Delays, Impact Fees Slowing Affordable Housing Projects in Southwest Florida

The final frontier.

That’s what officials believe the eastern reaches of Collier County to be in Southwest Florida’s need for affordable housing. But delays in acquiring permits, along with impact fees, market uncertainty and other obstacles, are hampering the affordable housing movement in the eastern end of the county, according to the Naples Daily News.

Increased demand from buyers, the announcement of Ave Maria University and a frenzy of investor speculation pushed land prices in eastern Collier to unprecedented levels in the past three years. Lots in Golden Gate Estates, for example, sold for a median of $19,231 an acre in 2003, then sold for almost quadruple that in 2005.

Even as the Southwest Florida housing market is now in correction mode, land prices in the Estates are still rising compared to 2005. Prices are increasing in spite of an average monthly sales volume that is less than a third of what we saw in 2005. Lots in the Estates sold in January-May had a median price of $94,538 per acre, compared to $71,495 in 2005, a 32 percent increase.

“You sell to the market. Home prices are decreasing and land prices will follow. I think there will be a correction on land pricing.” said Darin MacMurray, Regional V.P. for Lennar Corp., which has operated under the U.S. Home brand in Collier until recently.

Lennar is in the planning stages to develop a new, 4,500-acre town called Serenoa that’s south of Immokalee and north of Ave Maria. MacMurray didn’t offer details regarding Serenoa, and the company hasn’t closed on a land purchase. He said that eventually, Serenoa will be the center of a new town, and represents the future of the area.

For now, the market for land in Southwest Florida — and particularly the market for homes out east, a little further from the coast — is in flux. If market uncertainty pushes land prices down, there’s plenty standing in the way of developing affordable housing in eastern Collier, real estate industry analysts concur.

Collier’s elected commissioners have upped impact fees, as well as wetlands permitting and other costs in place to ensure environmental protection that have made building and development out east more expensive. That, in turn, makes housing less affordable. All those costs play into whether developers can make projects in eastern Collier financially viable.

On a smaller scale, it’s the same calculation for lot buyers in Golden Gate Estates who want to build a new home. Some buyers choose to buy existing homes instead of building new because of permitting delays and building costs in the Estates. Collier real estate commissioners have increased impact fees on new development to more than $30,000 for a 2,000-square-foot home in recent months, an increase of more than 66 percent.

“The land seems to have plateaued even more so than the homes,” said Krista Goede, an agent with Amerivest Realty who specializes in the Estates.

Impact fees are levied so population growth pays for government services needed to accommodate newcomers, but their increases may slow sales in the area even more, making it tougher on sellers. As of late June, the area multiple listing service showed more than 1,700 lots for sale on the market in Golden Gate Estates and more than 700 homes for sale.

Builders and sellers are feeling the summer heat, but buyers - particularly first-time buyers - are benefiting from falling land and home prices in the Estates. Since January, prices have gone down 10-15 percent in the Estates, meaning a house that sold for $400,000 last year is now selling for around $350,000. Buyers are finding deals that they couldn’t touch last year.

Nevertheless, buyers are nervous the market will go lower still, as Florida home loan rates continue to creep upward, meaning that they essentially will have overpaid.

On the flip side, some area sellers are angry that they missed last year’s frenzy. But buyers are finding that motivated sellers are willing to come down in price.

Karrie Werner and Brian Hayhurst planned to buy a home in Poinciana Village that they rented for two years. But when the landlord decided to raise the price $100,000, the couple, first-time buyers with a new baby, thought they may be able to find more for their money. In March, they paid $337,000 for a four-bedroom, two-bath home on 2 acres in Golden Gate Estates that was built in 2003 — $48,000 less than the initial asking price.

But even as the market declines and prices come down, few expect prices to stay down for long.

“Land still is gold in Southwest Florida,” MacMurray said.