What is considered a primary cause of economic obsolescence?

Economic obsolescence refers to a loss in value due to external factors that are beyond the control of property owners. This is distinct from physical deterioration or functionality issues within the property itself. A primary cause of economic obsolescence is changes in local government policies, which can significantly impact property values. For example, zoning changes, tax rate adjustments, or new regulations can alter the desirability of a location, leading to decreased property values in the area.

This type of obsolescence often stems from decisions made at a governmental level that affect economic conditions, such as the introduction of new businesses, infrastructure projects, or environmental regulations. Unlike other options that focus on issues like physical condition or improvements in nearby properties, which might enhance property values or are influenced by market factors, changes in local government policies directly affect the broader economic landscape surrounding a property.