The principle of regression suggests that a superior property in an inferior neighborhood will:

Correct Answer

C) Be pulled toward the lower values around it

Why this is correct: The principle of regression (or regression to the mean) states that the value of a superior property in an inferior neighborhood will be pulled down toward the values of the surrounding, lesser properties. Buyers willing to pay for a superior home will typically choose a better neighborhood. Why the other choices are wrong: 'Sell for its full replacement cost new' ignores location influence. 'Lift the values of surrounding properties' describes the principle of progression, the opposite effect. 'Be unaffected by neighboring properties' violates the principle of conformity; all properties are affected by their surroundings. Exam tip: Regression pulls the best house down; progression pulls the worst house up. Both are driven by the neighborhood norm.