What type of deterioration affects a property's functionality?

Functional obsolescence refers to a reduction in the usefulness or functionality of a property due to design features that are outdated or inadequate for current standards and preferences. This can occur when a property lacks modern amenities or when its layout is no longer ideal for the way people live or work today. For instance, a home with only one bathroom in a market where multi-bathroom homes are the norm may experience functional obsolescence because it doesn’t meet the current needs of buyers.

In determining the type of deterioration affecting functionality, functional obsolescence specifically addresses issues related to how a property operates or serves its intended purpose. It excludes the physical aspects of deterioration, which pertain more to the wear and tear of materials and structures, and does not involve external economic factors as seen in economic obsolescence. Environmental deterioration relates to property conditions affected by surrounding environmental factors. Therefore, functional obsolescence is the most accurate term when discussing how a property may fall short in functionality.