Humber/Ontario Real Estate Course 4 Exam Practice

About three years ago, Veilleux purchased a home in suburban Anycity. At that time, the property was valued at $325,000. Recently, an adjacent property was rezoned to neighbourhood commercial despite Veilleux's objections. The net result was a loss in value given the impact of this changed use and the less desirable location adjacent to a newly-built convenience store. Which principle of value is involved?

1. Conformity

2. External Factors

3. Progression

4. Regression

The correct answer is: External Factors

The principle of value at play in this scenario is related to external factors. Specifically, external factors refer to influences outside a property that can affect its value, such as changes in zoning laws, neighboring developments, and overall community changes. In this case, the rezoning of an adjacent property to neighbourhood commercial has negatively impacted the value of Veilleux's home. The presence of a convenience store nearby has made the location less desirable, demonstrating how changes in the surrounding environment can significantly impact property values. This principle underscores the importance of understanding that a property's worth is not solely determined by its own characteristics but is also strongly influenced by the attributes and activities of neighboring properties. In this instance, the external factor of the new zoning designation and its consequences led to the depreciation of Veilleux’s property's value.