
The Economics of House Vs. Land Value
When one buys a home, one is really buying two main components: 1. The House, and 2. The Land or Lot. All other things being equal, it is better to buy a home in which the lot (as opposed to the house) represents the higher percentage of the total value. Two Basic Tenets of Real Estate 1. Lots appreciate in value. 2. Houses depreciate in value. Lot values realistically run from 20% to 90% of the total value of a property. Discounting inflation, the cap on the value of a h