Functional obsolescence is best defined as what?

Functional obsolescence refers specifically to a decrease in a property's value that arises from outdated design features or poor architectural decisions that no longer meet current standards or preferences. This can occur when a property has elements like an inefficient layout, insufficient amenities, or outdated technology that do not appeal to today's buyers or renters.

For example, a home with only one bathroom in a neighborhood where most homes have at least two can be considered functionally obsolete, as its design fails to meet the expectations of potential buyers. This distinction is vital because it emphasizes that the decline in value is related to the property’s functionality and appeal, rather than external economic factors or temporary market conditions. Understanding this concept is crucial in mass appraising as it influences property assessments, investment decisions, and renovation strategies.