What type of reduction in property value is caused by a noisy airport located nearby?

What type of reduction in property value is caused by a noisy airport located nearby?

• A. Physical deterioration
• B. Functional obsolescence
• C. Economic obsolescence
• D. External obsolescence

Answer: (C)

The correct choice is determined by the type of external factors impacting property value. Economic obsolescence refers to a reduction in property value caused by external factors that are beyond the control of the property owner. In this case, the noisy airport constitutes an external environmental issue that can negatively impact the desirability and, consequently, the market value of nearby properties. The disturbance from the airport noise represents a situation where the property's appeal is diminished due to surrounding external conditions, thus qualifying as economic obsolescence. This type of obsolescence is specifically related to factors such as changes in neighborhood character, natural disasters, or, as in this instance, excessive noise from a nearby airport. In contrast, physical deterioration would relate to the physical state of the property itself, while functional obsolescence involves applied design or layout inefficiencies that can affect property utility. External obsolescence and economic obsolescence are closely related, but in real estate terminology, economic obsolescence is often specifically used for market-driven changes.

The correct choice is determined by the type of external factors impacting property value. Economic obsolescence refers to a reduction in property value caused by external factors that are beyond the control of the property owner. In this case, the noisy airport constitutes an external environmental issue that can negatively impact the desirability and, consequently, the market value of nearby properties.

The disturbance from the airport noise represents a situation where the property's appeal is diminished due to surrounding external conditions, thus qualifying as economic obsolescence. This type of obsolescence is specifically related to factors such as changes in neighborhood character, natural disasters, or, as in this instance, excessive noise from a nearby airport.

In contrast, physical deterioration would relate to the physical state of the property itself, while functional obsolescence involves applied design or layout inefficiencies that can affect property utility. External obsolescence and economic obsolescence are closely related, but in real estate terminology, economic obsolescence is often specifically used for market-driven changes.