The average sale price for a house in Leelanau County last year was more than $760,000. Local developer Corey Flaska wants to build and sell homes for (significantly) less – and believes his newest project can serve as the case study for how other developers can follow suit.

For the past two years, Flaska and his company, Leelanau Construction, have been working to turn 5.5 acres of vacant land in Cedar into a brand-new 30-home subdivision. Speaking to the Leelanau Ticker in January 2022, Flaska laid out the core principle of the project: “smaller land, smaller home, smaller price.”

Fast-forward to February 2024 and the homes in that development – called Cedar Cove Estates – are starting to hit the market, all for less than $430,000. It’s an increasingly hard-to-find price point, especially in a county that has become one of the most expensive housing markets in the entire state. But while Flaska thinks his project could inspire other builders to bring similarly mid-priced homes back to Leelanau County, he’s also concerned that the county’s existing market can’t help but reward higher-end builds.

“The issue with Leelanau is that the land costs are just very expensive,” Flaska tells the Leelanau Ticker. Couple that with lofty costs in virtually every other area of construction – from materials to labor – and Flaska says most developers end up building more expensive homes simply to earn back their investment.

“This isn't a desirable type of development for a lot of developers and builders,” Flaska admits of the Cedar Cove approach. “We all know we can go build on one-acre lots and then turn around and sell $800,000 houses. So, there's bigger profit elsewhere. And those more expensive houses seem to be selling very well in Leelanau right now, too. That’s why developers and builders are, I think, always leaning toward more expensive projects, and why you see fewer homes on the lower end of the price range.”

There are currently 86 residential units for sale in Leelanau County; just 21 of them are priced below $450,000. Five of those listings are for ownership shares of properties at The Homestead, and four others are condos. Of the remaining 12 listings, five are Flaska’s.

Flaska is quick to point out that Cedar Cove Estates should not be categorized as an affordable housing or workforce housing project. “Nothing against those terms, but this is a development fully paid for by me, and affordable housing and workforce housing are usually supplemented by the government or the taxpayer, or some other entity that helps you get to those low prices,” he explains. Instead, Flaska says he managed to hit lower prices simply by building smaller homes on smaller lots.

“We’ve been saying the same thing from the beginning: ‘smaller lot, smaller house, smaller price,’” Flaska says. “That doesn't mean the quality is down. It doesn't mean the price per square foot is any different. It's just that you're getting a little less of everything. That’s the formula I approached here to try to reduce price. These are 65-foot by 100-foot lots. And you just don’t see that in Leelanau very often. It’s more the downtown Traverse City style, and you do see it in the villages sometimes, but those houses have been around for 100 years.”

So far, Cedar Cove Estates includes 10 finished single-family homes, but 20 units are still to be built across four duplexes and three quadplexes. Flaska estimates the duplexes will be built and move-in ready by the end of the year, with the quadplexes to follow in 2025. The single-family homes are 1,442 square feet each, while the duplex and quadplex units will be slightly smaller, 1,307 square feet.

As demand in Leelanau grows for more attainable housing, Flaska hopes other developers will try out the ‘smaller lot, smaller house, smaller price’ approach. “I really do think the way to help solve the problem of expensive housing is to reduce the size of the land,” he says. “Because once you reduce the size of the lots…well, you don’t come in and put an $800,000 house on a 6,500-square-foot lot!”

To build more homes on more lots, though, developers might need an assist from the government side. For one thing, many parts of Leelanau have zoning restrictions that, in the name of rural character, prevent denser development. Flaska says it’s not uncommon to see five-acre lot minimums, especially further away from the villages. For another thing, taxes can prove burdensome for builders trying to split up larger parcels to make way for denser residential developments.

“When a developer develops a parcel of land like this, one of the biggest risks is splitting all the lots, because the second January 1 hits the following year, the taxes uncap on all of it,” Flaska explains. “When [Cedar Cove Estates] was one piece of property, I paid $283 a year in taxes, and that rate would probably have stayed more or less the same for the next 100 years.”

When Flaska split the property to build Cedar Cove, though, his tax bill jumped to $700 per year, per lot. In bigger subdivisions, he says, tax uncapping can be even more extreme, sometimes hitting $2,000 or $3,000 per lot. Flaska calls that approach “punishing” for developers, and says it dissuades companies from building at higher density even when the zoning allows for it.

“So, I wonder: What if we didn’t uncap the taxes until after the property changes hands from the developer to the buyer, when there is actually a house there?” Flaska says. “What’s the difference in waiting, especially when it would reduce a lot of risk for developers who want to do more? I’d love to see more discussion about that in Leelanau County.”