Which principle indicates that lower-priced properties may gain value through association with higher-quality properties?

The principle that indicates that lower-priced properties may gain value through association with higher-quality properties is the Principle of Progression. This principle is based on the idea that the value of a property can be positively influenced by the presence of more valuable and high-quality properties nearby. When lower-priced properties are situated in a neighborhood with higher-valued properties, potential buyers may perceive them as more desirable, thus driving up their market value.

For instance, if a newly built luxury home is constructed in a neighborhood predominantly filled with older, less expensive houses, the values of those older homes may increase simply due to the new, higher-value property in their vicinity. This principle highlights the interconnectedness of property values in close proximity and how the characteristics of surrounding properties can enhance the appeal and market value of a property.

The other options pertain to different concepts in real estate appraisal and valuation. The Principle of Surplus Productivity relates to the productivity of land or improvements that contribute to excess income. The Principle of Contribution addresses how much value an individual improvement adds to the overall value of a property. The Principle of Substitution states that a buyer will not pay more for a property than the cost of a similarly desirable substitute property. While these principles are important in real estate valuation, they