What principle of value applies to a $175,000 house built next to a $75,000 house?

The principle of value that applies to a $175,000 house adjacent to a $75,000 house is the principle of progression and regression. This principle states that the value of a property can be affected by the value of surrounding properties.

In this scenario, the higher-value house (the $175,000 property) may benefit from the presence of a lower-value house (the $75,000 property) due to the overall neighborhood dynamics, leading to a potential increase in the higher-value house's desirability and market value. Conversely, the lower-value house could experience a decrease in value due to the presence of a significantly more expensive home nearby, which could draw attention away from the lower-value property.

Understanding this principle helps in assessing the impact of surrounding real estate on property valuations, illustrating that the market value is not determined solely by the individual attributes of a property but is also influenced by its location and the characteristics of surrounding properties.