What is regression in real estate appraisal?

Regression in real estate appraisal refers specifically to a decrease in the value of a property that is caused by the presence of less desirable or lower-quality properties in the surrounding area. The principle behind this concept is that when a property is located in a neighborhood with less attractive homes or commercial buildings, the overall appeal and desirability of the area can decline, which in turn can negatively affect the value of an individual property.

This concept is important for appraisers to understand because they need to be aware of how the characteristics of neighboring properties can influence the value of the property they are assessing. An appraiser will often consider comparable sales to determine how the quality of surrounding properties can affect the market value, making regression a critical factor in the appraisal process.

The other choices pertain to different concepts in real estate. Improvement in property value over time relates to appreciation, while strategies for increasing property values could involve renovations or market strategies, which do not specifically define regression. A method for determining market value generally refers to approaches like the sales comparison or income approaches, rather than the impact of regressional factors.