What term is used to describe the loss in value due to factors external to the property?

The term that describes the loss in value due to factors external to the property is economic obsolescence. This type of obsolescence arises from external factors such as changes in market conditions, neighborhood decline, or economic downturns that negatively impact property values. It is important to recognize that economic obsolescence is not related to the physical condition or functional characteristics of the property itself, but rather to adverse conditions in the surrounding environment or economic landscape.

Functional obsolescence refers to a reduction in value due to design flaws or outdated features within the property. Physical obsolescence involves deterioration or wear and tear that affects the property's condition, leading to a decline in value due to physical factors. Environmental obsolescence could be seen as closely related to economic obsolescence, but it typically focuses more on specific environmental hazards or detractors rather than broader economic conditions. Therefore, economic obsolescence is the most accurate term to describe the loss in property value driven by external influences.