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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Metacomet who wrote (56267)	6/18/2006 9:08:50 AM
From: Moominoid	Read Replies (2) \| Respond to of 306849

I guess I don't understand what depreciating means. I agree that the house is deteriorating and undergoing physical obsolescence. But I understand depreciation to be a financial term related to a loss of value over time. I mean that without maintenance the value of the house will decline due to physical wear and tear. Landlords get to deduct this depreciation from their income while owner occupiers don't. So I am using depreciation in the accounting/tax sense. Not sure what to call the price change - I would just say prices are rising or falling. Yes in the long-term house prices rise. Elroy will tell you they rise at exactly at the rate of growth in nominal income (I think). Adjusted for quality I don't see why the structures should rise in price any faster than the cost of building them in the long term. The change in the value of land will depend on its location and the demand to locate economic activity on it. In desirable locations it should rise in value faster than in areas with little competition for land.