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

The term that specifically describes the decrease in value of a property due to external factors is "external obsolescence." This concept refers to a loss of value that arises from influences outside the property itself, which can include changes in the surrounding environment, such as increased traffic, environmental hazards, or economic downturns that affect a neighborhood as a whole.

External obsolescence is distinct from other forms of obsolescence. For example, depreciation generally refers to the overall decline in value of a property due to wear and tear or age, which can be more directly tied to the property’s condition rather than external factors. Obsolescence can refer to a broader set of issues, including functional obsolescence, which deals with inadequacies in the property itself. Market decline also indicates a drop in property values but does not pinpoint the external factors causing that decline as specifically as external obsolescence does. Thus, external obsolescence is the most accurate term to capture the effect of external circumstances leading to a property's loss in value.