California Real Estate SalespersonProperty Valuation and Financial AnalysisEasy
A modest, well-kept three-bedroom home is located in a neighborhood dominated by much larger, higher-value homes. Because of its surroundings, the modest home's value is pulled upward compared to an identical home located in a neighborhood of similarly modest homes. This effect illustrates which principle?
- AConformity
- BRegression
- CProgression
- DSubstitution
Show answer & explanationAnswer & explanation
Correct answer: C. Progression
The principle of progression states that the value of a lesser property is enhanced by its association with more valuable properties nearby. The opposite effect, where a high-value home is dragged down by lesser neighbors, is called regression.
Why the other options are wrong
- A. Conformity concerns similarity of use, not value shifts between dissimilar properties.
- B. Regression is the opposite effect — a higher-value home losing value near lesser homes.
- D. Substitution relates to comparing equally desirable alternatives, not value pull from surroundings.
Principle of Progression
The value of a modest property increases when it is located among higher-valued properties.
- Opposite of regression
- Common in appraisal of homes in mixed-value neighborhoods
- Neighboring property values influence subject value
Memory trick: Small house climbs up next to big houses (progression).