Which principle states that value is created when elements of real property are in equilibrium?

The principle that value is created when elements of real property are in equilibrium is known as the Balance Principle. This principle posits that real estate value is maximized when various elements, such as land, improvements, and legal rights, are harmoniously aligned. When these elements are in balance, they complement each other, leading to an overall increase in the property's value.

The Balance Principle emphasizes the importance of having the right mix of property characteristics. For instance, a property with an oversized building on an undersized lot may suffer from diminished value because the size and use of the improvements do not align proportionately with the land. Conversely, a property where the improvements and land usage are well matched will typically see greater market appeal and higher value.

Other principles, like the Excess Land Principle or the Surplus Land Principle, deal with the amount of land that exceeds what is necessary for the highest and best use, while the Contribution Principle focuses on how much a specific improvement adds to the value of the property. These concepts are related but do not specifically address the equilibrium and balance of elements necessary for value creation in the same way that the Balance Principle does.