How does the principle of progression affect property values?

The principle of progression is a concept in real estate appraisal that indicates how the presence of higher-value properties can positively influence the value of lower-value properties within the same neighborhood. When inexpensive homes are situated near high-end properties, the demand for the less expensive homes may increase due to an association with the more desirable, higher-priced homes. This is because buyers often perceive these lower-end homes as offering a certain level of prestige or status simply due to their proximity to more expensive properties.

This principle is a vital aspect of how neighborhoods can experience varying property values based on the overall composition of the area. As expensive homes surround cheaper homes, the latter can attract buyers who are willing to pay a premium, increasing their market value. This effect contributes to the overall growth and improvement in the neighborhood's property values. It reflects the idea that the quality and characteristics of surrounding properties can significantly impact an individual property's worth.