Real Estate Council of Alberta Fundamentals Practice Exam

What does the Principle of Change refer to in real estate?

1. Historical significance of properties

2. Growth in property value over time

3. Impact of economic, political, and social forces on property values

4. Changes in ownership of real estate

The correct answer is: Impact of economic, political, and social forces on property values

The Principle of Change in real estate focuses on the dynamics affecting property values influenced by various external factors, such as economic, political, and social forces. This principle recognizes that property values do not remain static; they fluctuate due to changes in the environment surrounding them. For instance, economic growth can lead to increased demand for properties, while social trends can shape buyer preferences, thus altering values. Additionally, political decisions, such as zoning changes or tax policies, can significantly impact property desirability and pricing. Understanding this principle is crucial for real estate professionals as it helps them anticipate future trends and make informed decisions that reflect the evolving market landscape. The other options, while related to real estate, do not encapsulate the essence of the Principle of Change in the same way. Historical significance, growth in property value, and changes in ownership are important aspects of real estate, but they do not directly address how external forces shape and influence property values over time.