What principle explains why a couple's older home may increase in value due to surrounding commercial development?

The principle that explains why a couple's older home may increase in value due to surrounding commercial development is anticipation. This concept holds that the perceived future benefits stemming from nearby commercial improvements—such as new shops, restaurants, and entertainment venues—can lead buyers to expect greater value in the properties nearby. As prospective buyers anticipate an increase in desirability and convenience associated with such commercial growth, they are willing to pay more for homes in the area, thereby driving up property values.

This anticipation can be a significant economic driver in real estate, influencing not just individual properties but whole neighborhoods. When a community is seen as an area of growth or improvement, it can create a ripple effect, positively impacting the real estate market and resulting in higher home values as demand increases.