Unlocking Home Value: The Principle of Progression in Real Estate§
Principle of Progression demonstrates how the value of a lower-end property can be elevated when positioned among higher-end properties within the same neighborhood. This concept, deeply rooted in real estate appraisal, is driven by several interconnected factors such as the aesthetics of neighboring homes, low crime rates, quality schools, accessible recreational facilities, robust shopping options, proximity to transportation, and affluent local demographics.
In essence, this principle exemplifies the economic concept of positive externality. Much like the spillover benefits seen in other economic scenarios, here, a modest property gains value thanks to the advantageous characteristics possessed by surrounding upmarket properties.
Location’s Impact on Property Valuation§
Understanding the principle of progression underlines the critical role that location plays in property valuation. It’s a common observation that two houses with almost identical features can have vastly different market values because they are situated in disparate neighborhoods.
When engaging in real estate investment or seeking to enhance the value of a property, considering the surrounding environmental and socioeconomic factors is crucial. The principle of progression can therefore guide investors towards making more informed, impactful decisions.
Related Terms: Market Value, Property Location, Real Estate Valuation, Positive Externality.
