What defines Economic Obsolescence in property valuation?

Economic obsolescence refers to a reduction in a property’s value that occurs due to external factors that are outside the owner's control. These factors can include changes in the economy, such as fluctuations in the local job market, shifts in demographics, or the development of undesirable land uses nearby, such as factories or highways that negatively impact the desirability of an area. This concept indicates that even if the property itself is well-maintained and appealing, its market value may still decline due to influences that the property owner cannot directly manage or influence.

In contrast, other answers refer to scenarios that are either within the owner's control or specific circumstances that are not classified as economic obsolescence. For example, loss of value due to factors within the owner's control relates to physical or functional obsolescence, while improvements that decrease property value may indicate mismanagement of renovations or alterations made by the owner. Natural disasters impacting property resilience, though certainly impactful, are typically considered a form of physical damage rather than economic obsolescence, which specifically focuses on market-oriented external factors.