More bad news for Southern California builders holding a large inventory of finished lots: Land prices have plunged by more than half in the region, dropping to levels not seen since 2002, according to a report by The Hoffman Co., a land brokerage firm based in Irvine, Calif.And prices may still have further to fall, said company principal Norm Scheel. "The decline in the price of land has happened rapidly; in the past two years we've lost five years of appreciation," Mr. Scheel said. "We may see prices drop a few more percentage points in the first half of 2008, but land values already have taken the 'big hit' and whatever comes next will be minor in comparison." The largest decline, 52%, was recorded in the French Valley near Murietta. In West Palmdale and East Lancaster in the Antelope Valley north of Los Angeles, the value of finished lots have shrunk by 38%. In Riverside County, finished lot prices are down 42%; in San Bernardino, they are off by an average of 37%. According to the company, the lower prices are starting to bring investors and speculators back into the market. "After months of stalemate, it's suddenly a competitive environment," said Mr. Scheel, whose firm has more than $100 million in sales closed or under contract in the last three months.

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