#land-value

#land-value

In the priciest U.S. cities, three-quarters of the value of residential neighborhoods is just dirt. The aftermath of January's Los Angeles fires shows one consequence of this bizarre situation, since victims' insurance payouts (equivalent to the structure cost) are so much less than their mortgages (which include the precious land). Starting over elsewhere becomes a financially ruinous proposition.

A teardown house is a property where the land value outweighs the structure. These homes are often outdated, damaged, or too costly to renovate. Buyers - usually investors, builders, or developers- purchase teardown homes to demolish and rebuild. The National Association of Home Builders reports that teardowns accounted for nearly 7% of all single-family housing starts in 2022. This shows strong demand for redevelopment opportunities in competitive markets.