Keeping in step with the U.S. economy, Florida land values took a major tumble in 2008, with some areas losing more than half their 2007 worth.
According to the annual Florida Land Value Survey, conducted by the University of Florida’s Institute of Food and Agricultural Sciences, rural land and land outside of metropolitan areas — eagerly sought by developers in recent years — is now commonly being offered for sale at a fraction of its cost.
“In some cases, it’s almost like a fire sale,” said Rodney Clouser, the UF professor of food and resource economics who led the survey. Some respondents reported large blocks of land being offered at 20 to 30 percent of their purchase price.
A population boom between 2002 and 2006 contributed to a dramatic rise in land prices throughout Florida. But now, the state’s annual population increase is expected to be only 10 percent of the boom years’ growth, according to UF population projections.
The survey, which does not cover urban land values, showed that land outside of cities primed for development, dubbed transition land, decreased by as much as 55 percent in the northern half of the state.
Transition land within five miles of urban centers in the southern half of the state lost nearly 40 percent of its value.
However, in the one exception to the otherwise gloomy economic picture, transition land more than five miles away from urban centers in the southern half of the state increased by 5 percent. Most likely, this is because its low price and relative location to large cities was seen as the best deal by those still looking to buy real estate, Clouser said.
Nevertheless, the 5 percent increase is significantly smaller than the nearly 17 percent increase for the same area last year.
Lagging development hasn’t just affected areas destined for shopping malls and homes. It has also contributed to drops as large as 26 percent in farmland values.
Although such land is typically evaluated primarily by the profitability of the crop produced, urban expansion was so rapid in recent boom years that many began to evaluate the land based on what it would bring if used for housing or other development purposes, Clouser said.
Land prices are expected to continue their drop through 2009 — although not as dramatically as in 2008. Survey responses from individuals involved in the Florida real estate market predict an overall drop between 5 and 17 percent.
Even after the national economic picture brightens, Clouser said, a surplus of homes and other existing development would need to be sold before demand would once again drive land prices up.
The report can be viewed at http://edis.ifas.ufl.edu/FE798.