Humber/Ontario Real Estate Course 3 Exam Practice

If a smaller home is on a street with larger homes, this is best described by which principle?

1. Highest and best use

2. Conformity

3. Progression

4. Regression

5. Adaptation

6. Specification

The correct answer is: Progression

The principle that best applies in this situation is progression. This concept refers to how the value of a property can be positively influenced by the proximity to larger or more valuable properties. In this case, the smaller home is located on a street surrounded by larger homes, which typically raises its market value compared to what it might be if it were situated among similar-sized homes. This effect occurs because potential buyers may perceive the neighborhood as desirable and thus place a premium on properties within it, further enhancing the value of the smaller home. The other principles do not accurately capture the dynamics at play here. For instance, conformity deals with how properties that are similar in style and size typically maintain their values better when in a neighborhood of like properties. In contrast, regression would suggest that larger homes can negatively impact the value of a smaller home if there are not enough similar properties around to balance the market perception.