What does the Trended Historical Cost Method rely on for cost estimation?

The Trended Historical Cost Method relies on the original cost of an improvement as its fundamental basis for cost estimation. This method involves taking the initial cost of an asset at the time it was built or acquired and then adjusting that cost to reflect changes in market conditions over time. These adjustments typically consider the inflation rate and other economic factors that influence costs.

By utilizing the original cost, this method provides a historical context that can be trended forward to derive a current cost estimate. This approach is particularly useful for properties that may not have readily available replacement cost data or for unique properties where market comparables are scarce. Consequently, the method effectively bridges historical data with contemporary appraisal needs, ensuring that the value reflects both the original expenditure and adjustments for current economic realities.