Which principle emphasizes that similar properties in similar locations tend to have similar values?

The principle that emphasizes that similar properties in similar locations tend to have similar values is known as Conformity. This principle suggests that properties achieve their highest value when they conform to the standards and characteristics of surrounding properties. When development is consistent and properties within an area are similar in size, style, and use, their values will typically reflect this similarity.

This concept is particularly important in real estate valuation, as it incorporates the idea that market forces and neighborhood characteristics play a significant role in determining property values. When properties conform to the prevailing conditions—such as architectural style or land use—they are likely to be valued closer to one another.

In contrast, externalities refer to external factors affecting property value, substitution emphasizes that a buyer will consider alternative properties of similar utility when making decisions, and balance pertains to the optimal mix of land use in an area. While each of these principles relates to property valuation, only Conformity specifically addresses the similarity in values of properties located in similar environments.