Nature is not produced by labor nor by the application of the capital goods produced by labor. Nature has, then, a zero cost of production in terms of labor and capital. Take the housing market for example. It is composed of numerous markets functioning simultaneously. Interest rates are normally equal.
Labor costs are normally equal.
Materials costs and transport costs are normally equal. Regulatory fees and taxes are equal at the state or national government level, but very unequal at the local level. And, then, there is land cost, the greatest variable of them all as a component to housing prices. The tendency is that any reduction in the labor, materials, tax and other costs associated with housing will be capitalized into high land prices. A two-factor model does not capture these dynamics.