> A question of practical as well as theoretical significance:
Yes, even *immediate* practical significance, no?
> Do houses depreciate?
Yes. Unmaintained, houses tend to fall apart, or in.
> If they do, why isn't this reflected in their price?
Judging just from my local market, it is. But houseowners (often)
keep up maintenance--depreciation budget, if you'd like--and thus
there is no net physical depreciation to reflect in the price.
Gil