Principle of Progression: How Does It Really Impact Homeowners?
As neighborhoods shift throughout the state of Illinois, local real estate valuations look towards the Principle of Progression. In real estate, this principle states that nearby higher-end properties positively influence a home’s value.
For potential home buyers, this principle helps to influence their net gain over time. As properties within a close proximity gain higher appraisals, theoretically, yours would as well.
Understanding the Principle of Progression
With the Principle of Progression, an influx in demand drives higher home prices. Thus, it creates a domino effect of sorts.
Many factors influence this principle. These include strong school districts, entertainment options, recreation features, the proximity of transportation, and shopping areas. Essentially, additional amenities help to drive business towards a given area.
Understanding the Principle of Regression
Compared to the Principle of Progression, the Principle of Regression is commonly thought of as its opposite. With this principle, larger and typically more expensive homes lose value when they are neighbored by smaller, less valuable homes.
From a practicality standpoint, this is one of the reasons why real estate professionals generally discourage homeowners from purchasing the biggest property in the area. Even if a buyer expands and improves a property, the value may not rise as you’d expect because of the neighborhood sandbagging it. Therefore, the given property’s value doesn’t rise as high as it could in an area where it doesn’t reflect the highest point of the real estate market.
How the Principle of Progression Affects Homeowners
The Principle of Progression should be taken into account for anyone looking to buy a home in the near future. In real estate, the phrase “up-and-coming” often comes to mind. With any type of investment, being an early buyer has its benefits. Generally, in the event the market takes off as investors hope, the earliest buyers receive the biggest net financial gain.
For prospective home buyers, this may entail buying a property outside of a major metropolitan area (instead of within it). However, the positive tradeoff means a better financial gain over time.
Schedule an Appointment with the Real Estate Attorney at Lee Scott Perres, P.C.
For first-time buyers, countless factors affect how the initial investment turns out in the long run. All things be equal, the Principles of Progression and Regression offer high-level insight to the house hunting conversation.
While homeowners don’t need to base their decision solely off these concepts, they do hold the potential to impact both your present and your future. For help with buying or selling a home, schedule an appointment with the real estate attorney at Lee Scott Perres, P.C.
