Principle of Progression

Principle of progression is a principle of real estate and the appraisal industry that states that the value of a lower-end property can be increased or positively affected by other higher-end property in the same neighborhood or locality. Factors such as aesthetics of other properties in the locality, low crime rate, good schools, recreational or shopping facilities, proximity of transportation, and higher median income can have a positive effect on even lower-end property in the same neighborhood, causing the value of such property to go up. In essence, the principle of progression illustrates the economic concept of positive externality, whereby a bystander or object is positively affected by the acts or characteristics of another person or object. Location plays an important role in property valuation. Two properties with exactly the same features can have completely different market values if they are located in different neighborhoods.