Which term is defined as the value created by the relationship of cause and effect?

The term that refers to the value created by the relationship of cause and effect is the Principle of Change. This principle suggests that the value of a property can fluctuate due to various factors that cause change in the market, the environment, or the property itself. In real estate, changes such as renovations, shifts in economic conditions, demographic trends, or changes in local infrastructure can all have significant impacts on property value. Understanding this principle is essential for property tax consultants because it helps them assess how external and internal changes can affect property valuations over time, guiding them in their tax consulting practices.

While the other principles are also important in understanding property values, they each address different concepts. The Principle of Anticipation concerns the expectation of future benefits influencing present value. The Principle of Supply and Demand relates to how the availability of properties and the desire for them impact value. The Principle of Substitution indicates that a buyer will not pay more for a property than the cost of acquiring an equally desirable substitute property. Each of these principles plays a role in property value assessments, but it is the Principle of Change that specifically speaks to the cause-and-effect relationship impacting value.