Which type of obsolescence arises from external factors such as economic downturns?

External obsolescence refers to a loss in property value due to negative external factors affecting the property, often associated with conditions outside of the property itself. These factors can include economic downturns, changes in neighborhood dynamics, increased crime rates, or environmental issues. Such influences reduce the desirability or utility of a property, leading to a decline in market value.

For instance, if a new highway is constructed nearby that increases noise levels or leads to increased traffic congestion, the surrounding property's value may decrease not because of anything wrong with the property itself, but due to adverse changes in the external environment. Thus, the significant impact that external factors can have on property values clearly highlights why this concept is classified as external obsolescence.