- if land value depends on the community that was there, then owners would all have incentive to rebuild their burnt down houses to regain the values.
- but owners probably realize most owners will sell their property as soon as things are back to normal. that would reduce the value of surrounding houses.
- so owners will rebuild as fast as possible, probably cutting lots of corners, just so they won't left behind to sell.
- some people start selling their houses but the late comers realize it's not worth it for them to sell it because the value has dropped a lot. so they stay.
- the new owners move in to the area and house prices go back up.
- if land value depends on the community that was there, then owners would all have incentive to rebuild their burnt down houses to regain the values.
- but owners probably realize most owners will sell their property as soon as things are back to normal. that would reduce the value of surrounding houses.
- so owners will rebuild as fast as possible, probably cutting lots of corners, just so they won't left behind to sell.
- some people start selling their houses but the late comers realize it's not worth it for them to sell it because the value has dropped a lot. so they stay.
- the new owners move in to the area and house prices go back up.