What causes external obsolescence?

External obsolescence refers to a decrease in the value of a property due to factors outside the property itself. This can be influenced by various locational or general economic factors such as changes in the surrounding neighborhood, shifts in the economy, increased crime rates, or the development of undesirable land uses nearby (like factories or waste facilities). These external influences can impact desirability and, ultimately, market value without being directly related to the property’s physical characteristics.

The other options relate more to internal conditions or immediate physical characteristics of the property. Internal structural defects pertain to issues within the property that can diminish its value due to maintenance or repair needs. Outdated building materials might affect the attractiveness or functionality of the home itself. Low construction standards indicate a deficiency in quality that would also relate primarily to the property itself. While these factors can influence property value, they stem from within the property and its condition, rather than from external, outside influences, which defines external obsolescence.