Which type of obsolescence is caused by factors beyond property boundaries?

The type of obsolescence caused by factors beyond property boundaries is external or economic obsolescence. This form of obsolescence refers to a decrease in property value due to external factors that are not related to the property itself. These factors can include changes in the neighborhood or surrounding area, such as a decline in the local economy, increased crime rates, loss of demand for the area due to changes in demographics, or environmental issues like pollution and proximity to undesirable facilities.

The significance of external obsolescence lies in its impact on property values, which can diminish even if the property itself remains in good condition and well-maintained. It highlights the importance of considering the broader environment when evaluating real estate investments, as external influences can significantly affect a property’s desirability and market value.

In contrast, physical deterioration refers to the wear and tear of the property itself, while functional obsolescence stems from inefficiencies or inadequacies in the property's design or layout. Environmental obsolescence might relate more specifically to issues like natural disasters or local environmental changes affecting a property. However, external obsolescence uniquely encapsulates the effects of external, economic, or social shifts beyond the property's physical attributes.