Property Valuation
A Connecticut appraiser is valuing a historic Victorian home in a neighborhood with modern ranch homes. The Victorian's higher-quality construction and unique architecture represents a positive value difference over the ranches. However, buyers in the area prefer smaller modern layouts. The appraisal would account for this as:
APhysical deterioration—curable
BRegression: the Victorian's value is pulled down by the lower-value surrounding properties✓ Correct
CProgression: the Victorian benefits from being surrounded by less expensive homes
DExternal obsolescence from outdated architecture
Explanation
The principle of regression states that a higher-value property is negatively impacted by being surrounded by lower-value properties. The Victorian's value would be pulled down by the surrounding ranch homes below what it would otherwise command.
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