Someone once said , “ The only constant is change, continuing change, inevitable change.” In 2001, a lot in Summerbrooke sold for $28,000, by 2003 $46,000, now $90,000 plus. This trend is reflected all over Tallahassee and Leon County. The simple truth is we have a shortage of available land to develop and what we can develop, due to regulation, land prices and the increase in construction cost has increased the price of available lots. Tallahassee is an extremely desirable place to live and value is driven by supply and demand. In our area we are very rarely able to supply more than the demand we have. This continues to be a positive reflection of increasing values.
Why is there a shortage of land and why have costs to create communities increased?
1. Comprehensive Plan- In 1991, the comprehensive plan was passed. At that time it was mandated that we draw a circle around the City, defining the urban service area which is the area where more intense development can take place. All land outside the urban service area was limited to two categories; category one is urban fringe which limits construction to 1 house per 3 acres and category two is rural which limits construction to 1 house per 10 acres. This seriously limited the availability of land for more intense development. When we analyze the cost of raw land and add that to less dense development coupled with the high cost of infrastructure we inevitably come out with either a shortage of lots or higher prices for available lots.
2. Permitting- Leon County and the City of Tallahassee have implemented some of the toughest, if not the toughest, development rules in the State of Florida. These rules have caused the average subdivision to take up to 18 months or longer to get permitted. As an example, some of the rules to develop in the urban service area include if you develop more than 4 units per acre you must set aside 40% of your land for green space. Another rule is if you have slopes in excess of 10% you must set aside 50% of this area.
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An overall example is that a 17 acre subdivision off Old Bainbridge only allowed for 7+ acres of this property to be developed into lots. With all the regulations and the cost of materials, it has driven the overall development costs up by more than 25% over the past five years. While this is a positive thing which enables Tallahassee to remain personal and offer a quality of life for our residents that we have come to love and enjoy it also creates a supply problem for the future. All this is said because these are the very factors that keep Tallahassee from having a “Bubble” in the Real Estate market.
3. Concurrency- The ability to have adequate public services available to a development, ie. Roads, schools, water and sewer. Because the roads have not been able to adequately keep up with growth we now are faced with a lack of available concurrency for new development. With the passage of Senate Bill 360, beginning January 1, 2007, all new developments must pay an appropriate share of the cost to improve roads and schools that will be affected by the development. While this is not necessarily a bad thing, it could add substantially to the future cost of each developed lot.
Tallahassee is a superb place to live only 30 minutes from the coast, featuring beautiful rolling hills, 2 universities, a major community college and the capital of our state. The area remains a very unique housing market in and of itself which is more insulated to other areas, and we continue to be a city that attracts many new people all the time.
lease look for article 3 in next week’s Sunday paper.
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