Humber/Ontario Real Estate Course 2 Exam Practice

Which principle of value suggests that a property's quality can be negatively impacted by the presence of inferior-quality properties in the same area?

1. Substitution

2. Competition

3. Change

4. Regression

5. Progression

6. Conformity

The correct answer is: Regression

Regression is the correct answer. Regression is a principle of value that states a property's value can be negatively impacted by the presence of inferior-quality properties in the same area. This is because the value of a property is influenced by its surroundings, and properties of lower quality can bring down the value of neighboring properties. This principle highlights the importance of considering the overall quality of the neighborhood when determining a property's value. The other options are: - Substitution: This principle suggests that a buyer will not pay more for a property than the cost of acquiring a comparable substitute property. - Competition: This principle refers to the idea that profits tend to be highest in businesses or industries with the most competition. - Change: This principle acknowledges that real estate values are constantly changing due to various factors such as economic conditions, market trends, and governmental influences. - Progression: This principle of value states that a property's value can be positively influenced by the presence of higher-quality properties in the same area. - Conformity: This principle emphasizes the importance of properties conforming to the expectations of buyers and investors in terms of style, quality, and features.