Humber/Ontario Real Estate Course 2 Exam Practice

What is the impact on the value of smaller homes in an area with larger homes?

1. Highest and best use

2. Regression

3. Progression

4. Conformity

5. Substitution

6. Demand and supply

The correct answer is: Progression

In an area with larger homes, the value of smaller homes is positively impacted by the principle of progression. This principle states that the value of lesser-valued properties is likely to increase when they are surrounded by higher-valued properties. Buyers are typically willing to pay more for a smaller home in an upscale neighborhood with larger homes, leading to an increase in value for the smaller homes. Therefore, progression is the correct answer in this scenario. For the other options: - Highest and best use refers to using a property in a way that will produce the highest value. - Regression is the principle where the value of higher-end properties can be negatively impacted by the presence of lower-end properties. - Conformity refers to the idea that a property's value is higher when it conforms to surrounding properties. - Substitution is the principle that states that a buyer will not pay more for a property if a similar one is available for less. - Demand and supply are factors that influence the overall real estate market but are not specific to the impact of smaller homes in an area with larger homes.