No-LA-SD-guy, valuing homes at building cost + 7-10% ignores the value of the land.
In coastal areas, even in severe recessions, the value of land will not be negligible.
You need a way to assign a value to the land. The market is the only way to do that, I think, and that’s why I stick to what can be observed – all actual transactions that took place over several RE cycles. If you have a better way, I am interested, but it is hard to beat just observing the market – the whole market, not just the cherries.
