What is the primary cause of economic obsolescence?

Economic obsolescence is primarily attributed to factors external to the property that negatively impact its value. This type of obsolescence arises from influences that are outside the control of property owners, such as changes in the local economy, neighborhood conditions, or regulatory changes. Examples include the construction of a nearby highway that alters traffic patterns, the location of undesirable facilities like landfills, or shifts in the socio-economic dynamics of an area that lead to a decrease in demand for properties.

Factors internal to the property, market trends within the locality, and changes in property ownership impact value in different ways but are not considered economic obsolescence. Internal factors refer to characteristics such as the property's design, condition, or maintenance issues, while market trends relate specifically to the buying and selling dynamics of that locality, which are often reflective of economic conditions rather than catalysts for obsolescence itself. Changes in property ownership might affect management or strategy, but they do not inherently lead to a decrease in a property's value due to circumstances outside its borders.