What term best describes the loss in value of a property due to external factors?

The term that best describes the loss in value of a property due to external factors is economic obsolescence. Economic obsolescence specifically refers to the decline in property value caused by external economic factors that are beyond the property owner’s control, such as changes in the surrounding area like increased crime rates, a decrease in demand for properties in the area, or changes in zoning laws that negatively affect property use.

This type of obsolescence is particularly significant since it can affect multiple properties in an area simultaneously due to economic conditions that impact the overall market. Understanding economic obsolescence is crucial for appraisals and investment decisions, as it can significantly affect the value and desirability of real estate.

Other terms like functional obsolescence, market obsolescence, and physical obsolescence denote specific types of depreciation related to the property itself or market trends but do not primarily focus on the external factors causing value loss. Functional obsolescence, for instance, refers to issues within the property itself, such as outdated design or lack of modern amenities, while physical obsolescence is about deterioration due to wear and tear. In contrast, market obsolescence can be seen as a broader term, yet it does not precisely capture the notion of external economic