California Real Estate Practice Exam

Buying property along a widening highway because you expect property values to increase demonstrates which principle?

1. Contribution

2. Substitution

3. Anticipation

4. Regression

The correct answer is: Anticipation

Purchasing property along a widening highway with the anticipation that property values will increase demonstrates the principle of anticipation. This phenomenon is based on the expectation that the property's value will appreciate due to the potential for improved infrastructure and increased demand for the property. This is not an example of the principle of contribution, which pertains to the value added to a property by an improvement, nor is it an example of the principle of substitution, which refers to the ability to replace a property with a similar one. It also does not demonstrate the principle of regression, which states that the value of a property can decrease due to the presence of lower-quality properties nearby.