Thursday, January 24, 2008

House Value Multiple?

I wonder if a house could have a multiple, based on the price that it is being sold for versus what the raw cost of the material would be. To me, it would seem as though the material cost of a house would depreciate at a relatively slow rate, but would still depreciate over time. Take that cost, or at least an estimated cost, and divide the selling price by that cost. I would be very interested in the results and the possible implications of this method.

It would be virtually the same concept as a P/E ratio of a stock.

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