A homeowner constructs a five-bedroom brick house with an indoor pool in a neighborhood of modest two-bedroom and three-bedroom frame houses on narrow lots. The value of this house is MOST likely to be affected by what principle

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The principle that most affects the value of the house is regression.

What is the regression of a property?

Property regression is a term used in the real estate business to refer to the loss in value of a property that is out of tune with other properties in the neighborhood in which it is located.

According to the above, the house with more features may lose value because the buyers in that area are going to look for a house with the characteristics of the neighborhood and this one, having superior characteristics, will have to adjust to the prices of this neighborhood in order to compete in the market.

This is known as regression because it has to lower its value according to its location and the properties that surround it.

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