According to the principle of regression, which situation could lower the value of a high-quality property?

According to the principle of regression, which situation could lower the value of a high-quality property?

• A. It is surrounded by other high-quality properties
• B. It is located near a lower-quality property
• C. It receives fewer updates
• D. It has a larger lot size

Answer: (B)

The principle of regression in real estate suggests that the value of a more expensive property can decrease when it is located near less expensive or lower-quality properties. This is primarily due to the perception of value that can be affected by the surroundings. When a high-quality property is in close proximity to a lower-quality property, potential buyers may question the overall desirability of the area, leading to a decrease in the perceived value of the high-quality property. This principle underscores the impact of surrounding properties on market perception. Conversely, options that involve high-quality surroundings, updates, or larger lot size typically enhance a property’s value rather than diminish it. Therefore, the presence of a nearby lower-quality property is a significant factor that can lead to a lowered valuation of an otherwise high-quality property.

The principle of regression in real estate suggests that the value of a more expensive property can decrease when it is located near less expensive or lower-quality properties. This is primarily due to the perception of value that can be affected by the surroundings. When a high-quality property is in close proximity to a lower-quality property, potential buyers may question the overall desirability of the area, leading to a decrease in the perceived value of the high-quality property.

This principle underscores the impact of surrounding properties on market perception. Conversely, options that involve high-quality surroundings, updates, or larger lot size typically enhance a property’s value rather than diminish it. Therefore, the presence of a nearby lower-quality property is a significant factor that can lead to a lowered valuation of an otherwise high-quality property.