What does regression indicate in the appraisal context?

In the context of appraisal, regression refers to the economic principle that lesser quality properties can negatively impact the value of surrounding higher quality properties. This phenomenon suggests that when a lower quality property exists in an area, it can drag down the overall market value of the surrounding homes due to perceptions of desirability and neighborhood appeal.

When appraisers assess property values, they consider the neighborhood's overall quality, which is influenced by the quality of all properties within that area. If there are properties that are of lesser quality, they can diminish the value of the higher quality properties nearby, leading to a reduction in area value. This principle highlights the interconnected nature of property values within a community or neighborhood.

Higher quality properties, on the other hand, can sometimes increase overall area value, but this is more indicative of the principle of progression rather than regression. The concept of regression specifically focuses on the lowering influence that lesser quality properties have on the values of better properties in the same vicinity.