What is "functional obsolescence"?

Functional obsolescence refers to a decrease in a property's value resulting from outdated features that may not meet current buyer expectations or functional needs. This can occur due to changes in design trends, technological advancements, or shifts in consumer preferences. For instance, a home with an outdated kitchen that lacks modern appliances or a property with an inefficient layout can be less desirable in the current market, leading to a reduction in its overall value.

This concept highlights the importance of keeping properties updated to retain their market appeal and competitive value. Choices that relate to location or zoning regulations more specifically address external factors affecting property value rather than the intrinsic qualities of the property itself, which is what functional obsolescence focuses on.