Which of the following best defines Physical Deterioration?

Physical deterioration refers specifically to the decline in a property’s value caused by the physical condition of the structure or site. This typically encompasses aspects such as wear and tear over time, weather effects, and other forms of damage resulting from natural forces.

In the context of property valuation, physical deterioration implies that the asset has incurred damage or degradation that negatively impacts its utility, safety, or aesthetic appeal. This deterioration can stem from various factors, including lack of maintenance, aging, natural disasters, or environmental conditions. Understanding this concept is critical for appraisers, as it directly affects property valuation assessments.

The other options focus on different types of depreciation that are not related to physical aspects of the property. For instance, functional obsolescence and economic factors reflect issues related to design and market conditions, rather than the physical state of the property itself. Thus, the definition provided in the correct answer accurately captures the essence of physical deterioration as it pertains to real estate appraisal.