Janice's house is a perfectly nice house, though many of the other homes on her block are abandoned, in foreclosure, or in disrepair. Her real estate agent informs her that the lower-value houses on the block are bringing down the value of her home. What principle of value is at work here?

This principle suggests that the value of a property increases or decreases based on the value added or subtracted by specific features or improvements. While it is relevant in evaluating how features impact a property's worth, it does not account for external factors like surrounding properties, which is crucial in Janice's situation.

The principle of substitution states that a property’s value is influenced by the cost of acquiring a similar property in the market. Although this principle addresses market dynamics, it does not explain how lower-value homes negatively impact the value of a higher-value property, which is the core issue in Janice’s scenario.

This principle posits that a lower-value property can increase in value due to the presence of higher-value properties nearby. While this concept is relevant in a different context, it does not apply to Janice's situation where lower-value homes are causing her property to lose value.