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(Carl Cronan is editor of Real Estate Florida.)

GAINESVILLE, FL-Land values in Florida’s rural areas lost more than half their value throughout 2008 while tracts closer to metropolitan areas, once eagerly sought by developers, are now being offered for sale at a fraction of their original cost. These are the conclusions of a newly released study by the University of Florida.

The annual Florida Land Value Survey, conducted by the UF Institute of Food and Agricultural Sciences, shows that land outside cities primed for development, dubbed transition land, decreased by as much as 55% in the state’s northern half, while transition land within five miles of urban centers in the southern half lost nearly 40% of its value. The survey does not cover urban land values.

“In some cases, it’s almost like a fire sale,” says Rodney Clouser, a UF professor of food and resource economics who led the survey. He notes that 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, with retail and residential developers seeking to capitalize on a perceived demand for new outlying neighborhoods. Now, however, the state’s annual population increase is expected to be only 10% of what it was during those boom years, the UF survey stated.

In one exception to the otherwise gloomy picture, transition land more than five miles away from urban centers in the southern half of the state showed an increase of 5%, most likely because its low price and relative location to large cities was seen as the best deal by those still looking to buy real estate, according to Clouser. Yet that increase is much smaller than the 17% boost for the same territory in 2007, he says.

Besides areas destined to become shopping centers and homes, farmland values are being affected by lagging development with drops as large as 26%. Such land is typically evaluated primarily by the profitability of crops produced, but urban expansion had been so rampant in recent years that it was being evaluated based on what it would bring if used for housing or other development, Clouser says.

Florida land prices are expected to continue dropping through 2009, though not as dramatically as last year, the survey states. Respondents involved in the state’s real estate market predict prices will fall anywhere from 5% to 17% this year, with Clouser adding that a surplus of homes and other existing development would need to be sold before land prices will rebound.

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