A property's value decreased because a noisy highway was built nearby. This is an example of:
Question & Answer
Review the question and all answer choices
Physical depreciation
Physical depreciation is incorrect because it refers to deterioration or wear and tear to the property itself, such as a cracked foundation or worn roof—not an external factor like a nearby highway.
Functional obsolescence
Functional obsolescence is incorrect because it occurs when a property's features become outdated or less desirable compared to modern standards, not due to external neighborhood changes.
Economic (external) obsolescence
Curable depreciation
Curable depreciation is incorrect because it refers to physical deterioration that can be economically repaired, which doesn't apply to an external factor like a highway.
Why is this correct?
Economic (external) obsolescence is correct because the highway is an external factor beyond the property owner's control that reduces the property's value. This type of depreciation affects the property due to external conditions rather than issues with the property itself.
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