valuation
external obsolescence
A loss in property value caused by factors outside the property's boundaries, such as nearby industrial uses, heavy traffic, noise, or an economic downturn. It is also called economic obsolescence. Because the owner cannot fix the cause, it is generally considered incurable. It is one of three types of depreciation used in the cost approach.
- Exam tip
- External obsolescence is almost always incurable because the problem is off the property. Functional obsolescence is inside the property and may be curable.
- Example
- A new landfill opens next to a subdivision, and home values fall even though the houses themselves are unchanged.
Related terms & state variants
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Last verified: 2026-10-23