In the progression-regression framework, which scenario illustrates regression?

In the progression-regression framework, which scenario illustrates regression?

• A. Largest home on the block
• B. A mid-range home
• C. The smallest house in the block
• D. A newly built home

Answer: (D)

In this framework, a property's value is influenced by the values of its neighbors: progression raises value when neighbors are higher-valued, while regression lowers value when neighbors are lower-valued. The scenario described as regression involves a property whose value is pulled down by surrounding lower-valued properties, pulling the property toward the neighborhood average. A newly built home can illustrate regression because, even though it’s new and may be high-quality, its value can be dampened by surrounding older, smaller homes. Buyers compare it to nearby properties, and the block’s overall market level can drag the newly built home’s value toward the neighborhood norm rather than keeping it at the top end. The presence of lower-valued neighboring homes exerts downward pressure, which is the essence of regression.

In this framework, a property's value is influenced by the values of its neighbors: progression raises value when neighbors are higher-valued, while regression lowers value when neighbors are lower-valued. The scenario described as regression involves a property whose value is pulled down by surrounding lower-valued properties, pulling the property toward the neighborhood average.

A newly built home can illustrate regression because, even though it’s new and may be high-quality, its value can be dampened by surrounding older, smaller homes. Buyers compare it to nearby properties, and the block’s overall market level can drag the newly built home’s value toward the neighborhood norm rather than keeping it at the top end. The presence of lower-valued neighboring homes exerts downward pressure, which is the essence of regression.