What type of depreciation occurs when a noisy airport is located next to a property?

• A. Curable obsolescence
• B. Physical deterioration
• C. Economic obsolescence
• D. Functional obsolescence

Answer: (C)

Economic obsolescence is depreciation caused by external factors beyond the property itself. When a noisy airport sits nearby, the property's desirability and market value can drop, and this loss can't typically be fixed by interior renovations or repairs. The impact tends to affect all properties in the area, and the problem is generally incurable because it stems from conditions outside the lot lines. In contrast, functional obsolescence comes from the property's own design or features growing outdated and can sometimes be remedied with remodeling. Physical deterioration is actual wear and tear to the structure, like a aging roof or damaged siding, which can be repaired. Curable obsolescence is a subset of functional obsolescence where the cost of updates is justified by the value gained. So the airport’s noise reduces value due to external conditions, which is why this is economic obsolescence.