In real estate valuation, what does the term "external obsolescence" refer to?

The term "external obsolescence" is correctly identified as referring to negative external factors that impact a property's value. This type of obsolescence occurs when external elements, often outside the control of the property owner, adversely affect the desirability or value of a property. These factors can include things such as changes in the local economy, increased crime rates, environmental issues, or shifts in neighborhood dynamics, like a decline in the quality of surrounding properties or infrastructure.

In contrast, physical deterioration relates specifically to the wear and tear of the property itself, which does not encompass external influences. The obsolescence of property fixtures and improvements focuses on the age or functionality of items within the property rather than external conditions. Meanwhile, changes in housing trends might affect property values, but they are not always categorized as obsolescence unless they result from negative external conditions impacting a particular property or area. Therefore, the most accurate definition of external obsolescence aligns with the concept of external factors undermining property value.