Property Valuation
Which type of depreciation affects a Mississippi Gulf Coast condo's value due to increased insurance costs and storm risk following a hurricane season?
APhysical deterioration
BFunctional obsolescence
CExternal (economic) obsolescence✓ Correct
DCurable physical deterioration
Explanation
Increased insurance costs and storm risk from external factors (hurricanes, rising sea levels) represent external (economic) obsolescence—a loss in value from causes outside the property that are generally incurable by the property owner.
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