Humber/Ontario Real Estate Course 2 Exam Practice

What does the principle of progression entail in real estate valuation?

1. A higher value property helps increase the value of adjacent lower value properties.

2. A higher value property decreases the value of adjacent lower value properties.

3. Properties should be uniform in value to maintain market stability.

4. An exterior facelift will have minimal effect on property value.

5. An increase in mortgage interest rates.

6. Lower value properties should always be adjacent to similarly valued properties.

The correct answer is: A higher value property helps increase the value of adjacent lower value properties.

The principle of progression in real estate valuation states that a higher value property can positively influence or increase the value of adjacent lower value properties. This is because the higher value property sets a benchmark or standard which can uplift the value of neighboring properties in the area. By comparison, option B suggesting that a higher value property decreases the value of adjacent lower value properties is not aligned with the principle of progression. Similarly, option C stating that properties should be uniform in value to maintain market stability does not fully capture the concept of progression, which allows for an interplay of varying property values in a market. Option D, indicating that an exterior facelift will have minimal effect on property value, is not directly related to the principle of progression in valuation. Option E mentioning an increase in mortgage interest rates and option F suggesting lower value properties should always be adjacent to similarly valued properties are not relevant to the principle of progression in real estate valuation as they do not address how the value of properties can interact and influence each other in a market.