How might economic obsolescence affect an appraiser's valuation of a property?

Economic obsolescence refers to a loss in property value due to external factors, such as adverse changes in the neighborhood, economic downturns, or shifts in local infrastructure that negatively impact the desirability of a property. When an appraiser evaluates a property, they consider all aspects that can influence its market value, including economic obsolescence.

This type of obsolescence is essential to recognize because it typically leads to lower appraised values. For example, if a property is located in an area that has experienced increased crime rates, a decline in economic activity, or a loss of major employers, these factors can detract from the property’s appeal and marketability. As a result, the assessed value will often reflect these negative influences, ultimately resulting in a lower valuation compared to properties unaffected by such factors.

In contrast, the other options do not accurately represent the influence of economic obsolescence on property values. Economic obsolescence does not increase property values, nor is it irrelevant to any property type, as it can impact both residential and commercial real estate. Understanding and recognizing this critical factor is vital for appraisers when producing an accurate assessment of a property's value.