What is a significant principle that affects property value due to competing properties?

The principle that significantly affects property value due to competing properties is known as substitution. This principle dictates that a buyer will not pay more for a property than what they would pay for a comparable substitute property. In a competitive market, if two properties are similar in terms of size, location, and amenities, the presence of these competing properties can limit the price of a property because buyers will gravitate toward the one that offers the best value.

When properties are viewed as interchangeable, if one is priced higher than what the market dictates — based on the available competition — it is unlikely to sell unless it offers something uniquely valuable that the others do not. This principle emphasizes the responsiveness of a property's value to changes in the market and the availability of alternatives, making it a fundamental concept in real estate valuation.

Other principles like regression, progression, or anticipation play roles in property valuation but are different in focus. Progression suggests that a lower-value property can increase in value due to being near more valuable properties, while regression indicates that a higher-value property can decrease in value due to being surrounded by lower-value properties. Anticipation refers to the expectation of future benefits associated with a property, impacting its current value. While these concepts are important in the valuation process,