Regression
National Real Estate Exam glossary · Valuation
Definition
The valuation principle that a property of higher value loses value when situated among properties of lower value—an over-improved home in a modest neighborhood. It is the converse of progression and a corollary of conformity; it underlies the warning against over-improvement.
Regression in plain English
Regression is the idea that a fancy house surrounded by plain, cheaper houses gets dragged DOWN in value by its neighbors. Buyers judge a home partly by its street, so the mansion can't fetch mansion prices in a modest area. It's like being the best-dressed person at a super-casual party — you still get lumped in with the vibe of the room. This is why real estate pros warn against "over-improving": pouring big money into a home that outshines its block rarely pays you back.
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