What does the Principle of Regression state regarding properties with different values?

The Principle of Regression states that a higher-valued property may decrease in value when located near lower-valued properties. This principle highlights how the presence of dissimilar properties in close proximity can negatively influence the perceived value of a more valuable property. Essentially, factors such as the quality and character of neighboring properties can exert a downward pressure on property values.

When a more valuable property is surrounded by less desirable or lower-valued properties, the overall market perception can shift, leading to a decline in the higher-valued property’s worth. This is based on the idea that potential buyers may question the value of such a property in light of its surroundings, ultimately affecting its market price.

Thus, recognizing this principle is essential in real estate as it underscores the importance of location and neighboring characteristics in property valuation. This understanding aids in making informed decisions for both buyers and investors.