I had a small city (~950 pop) mostly full of Simple Domuses, with Land Value 35-42 all around. Suddenly, I notice that most houses start devolving -- checking land values, I see that in most of the city, it has dropped massively, in some areas as low as 16!
I did not change anything, I was just waiting for some money to accumulate. There are more than enough plebs allocated for roads and water, so it's not like suddenly, some services stopped working. As for walker access, the houses have good Tax, Market and Internal Security coverage, like they used to.

Does anyone have an idea what might be going on? What might cause such a sudden drop of land value for almost all plots?

Idly guessed? Overflow error. Without being able to debug the code, that'd be my best guess.