What type of deterioration refers to a loss of value caused by external factors, such as location or environmental changes?

The term that describes a loss of value resulting from external factors, such as changes in location or environmental conditions, is economic obsolescence. This type of deterioration is often attributed to factors outside the property itself, including shifts in the surrounding neighborhood, changes in zoning laws, or broader economic trends that negatively impact property values. Unlike physical deterioration, which involves wear and tear on the property itself, or functional obsolescence, which relates to outdated features or design flaws within the property, economic obsolescence is specifically tied to external influences that affect the desirability and marketability of a property. Understanding economic obsolescence is critical for appraisers, as it helps assess the overall value of a property in a changing economic landscape.