Regression And Progression And I Promise This Is Not That Boring

Regression And Progression And I Promise This Is Not That Boring

Many of my home buyer clients are married couples, and I’ve noticed that most marriages consist of one “Numbers Spouse” and one “Features Spouse.” I think this is a good thing. It provides a healthy balance. Take me and Bonnie, for example: I, being the Numbers Spouse, would be ok living in a cardboard box behind the Waffle House if the price were right. My kids would be obese and dirty but our savings would look a little bit better than they do now and the cheesy eggs would be plentiful. Bonnie, on the other hand, cares more about the features of the home we live in and how they'll meet the family's needs.

I want to talk to my Numbers Spouse clients real fast about two economic principles, regression and progression.

In simple terms, regression occurs when you have the nicest house on the block and the average/ordinary houses surrounding yours bring your value down. Progression is the opposite. It occurs when you have the crappiest house on the block and the nicer houses surrounding yours increase your value.

Here’s a classic example of regression: All of the houses on a street were built the exact same way, are in the exact same condition, and are consequently worth the exact same amount. One of the houses gets a sweet, new $40,000 pool. Now the house is the nicest on the street and has a feature that makes it stand out. The problem is, that house’s value didn’t increase by $40,000. According to the appraisers and the amount potential buyers are willing to offer, the house’s value is only $10,000 above the value of its neighbor houses despite the $40,000 cost of the improvement. This is regression.

This blog wouldn’t be worth a darn if I didn’t provide an example of progression too. If you live in the East Valley you may be familiar with the planned community Power Ranch. Many agree it’s one of the nicest neighborhoods in Gilbert. If you look at the area between Pecos, Germann, Power, and Recker you’ll find mostly single family homes on traditional style lots. There are three mini sections in this area that are different, however. Two of the sections are single family homes but they are built very close to each other and have side yards and alley-entry garages. Another section by the Circle K where Cynthia and I used to go get donuts is comprised of condominiums. Of course these “exception” mini neighborhoods within Power Ranch are more affordable than the traditional style houses on bigger lots in the heart of Power Ranch, but because they’re still in the prestigious planned community they experience progression, and the nicer surrounding homes cause them to be worth more than they’d be worth if they were location even one mile N, S, E, or W.

Understanding the concepts of progression and regression is one tool in your home buying tool belt that can help us Numbers Spouses win in real estate. Forget keeping up with the Jones’. Move in down the street from the Jones and let their upgraded light so shine value onto your not-quite-as-fancy-but cool-enough-to-make-your-Feature-Spouse-happy-house.

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Phone: 480-426-1590
Dated: January 13th 2016
Views: 794
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