As overextended builders and developers shed unwanted home sites, the coming year is likely to offer the best deals of the decade for those looking to invest in Florida land.

“Prices have dropped about 20%,” says Sean O’Cuinneagain, a sales associate at Re/Max Action First in Clearwater. “There’s been a big slowdown in land sales throughout the Tampa Bay area in the last 18 months.”

In Ocala’s horse farm market, tracts of rural land are also down about 20%.

Lewis Goodkin, president of Goodkin Consulting in Miami (and a Florida Trend contributor), says there’s still plenty of interest in Florida land. “Unlike past turndowns when finding buyers for land was like pulling teeth without anesthesia, this time other builders and institutional investors like hedge funds are in hot pursuit of opportunities to buy at a discount,” he says.

Tampa-based Metro Development Corp. recently bought 8,300 central Florida home sites at a bargain price from Miami-based Lennar Corp., which reported a $514-million loss in third-quarter 2007. Metro also acquired another 1,000 lots from M/I Homes and now has about 30,000 lots in Florida, which it plans to sell once the market recovers. Morgan Stanley Real Estate purchased a 60% interest in 11,000 Lennar sites nationwide.

Bonita Springs-based WCI Communities is also unloading inventory. It sold $5.3 million in Florida land during the third quarter. A year earlier, it sold only $1.4 million in land.

On the Treasure Coast, Kolter Land Partners paid $45 million in December for M/I Homes’ portfolio of 500 residential lots and homes in Palm Beach and Martin counties. Two years ago, the same portfolio would have cost more than $60 million.

“While the current downturn in the residential market has significantly reduced demand in the short term, we believe that long-term demographic trends make the Southeast United States highly attractive,” says Jim Harvey, president of Kolter Land Partners’ Eastern Division.

Hedge funds scouting Florida for deals understand that when the market rebounds, land is the critical ingredient to any development deal, Goodkin says. “There has always been resistance to holding an asset that doesn’t generate income during the holding period, but in a world where there is an enormous amount of money looking for superior returns, land is an excellent candidate to achieve that goal.”