Hipmatt,
You misunderstand. If the residual value of the land is nothing, it is just another indicator of long term value for those who don’t want to time the bottom or would just like a home of their own. If a new or newish house is on sale for a price equal to its cost of building it today, you know you are not overpaying for the house itself and are getting the land for free. That is had got to be a good absolute value marker for the long term if you like the house and want to live in the area.
Where I live a small development plot cost at least 300K and build cost is at least 400K. if I could buy a house at 400K , I would run at the chance. .
The only exceptions I can think of to the free land value rule set out above is if the area is going down hill physically and socially so fast that it is heading for desolation row and might become a place in which you don’t want to bring your kids up in under any circumstances or employment is disappearing so fast that only a nightmare long distance commute could maintain your standard of living if you can’t work from home.
For marginal area in SDC, I think the cost of build is something that should be discussed more and knowledge on its level should be passed around through a site like this.
I bet few if any know if the cost of build is rising right now. The cost of labor might be weakening a bit but the cost of most materials is on a sky rocket .
(In areas where there has been no new build and/or few foreclosure, the analysis above is of little or no value
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