What type of obsolescence occurs when a property's function or appearance is no longer appealing compared to newer options?

Functional obsolescence refers to a reduction in a property's desirability due to outdated features, design, or layout that no longer meet current market expectations or standards. This can occur when a property's functionality is hindered because its design does not align with contemporary needs or trends, such as a lack of modern amenities, outdated floor plans, or inefficient use of space.

For instance, a home with a small kitchen and separate dining room may be considered functionally obsolete in a market where open-concept living spaces are the norm. This type of obsolescence is typically related to the inherent characteristics of the property itself and how it relates to current consumer preferences.

In contrast, external or economic obsolescence involves factors outside the property that negatively affect its value, such as changes in the surrounding area or economic conditions. Physical obsolescence pertains to the deterioration or wear and tear of the property itself, while functional obsolescence is specifically linked to how well the property meets the needs and tastes of today’s buyers.