Property Valuation
In a declining real estate market, which type of depreciation would most significantly affect property values?
APhysical deterioration — curable
BFunctional obsolescence — curable
CExternal (economic) obsolescence✓ Correct
DPhysical deterioration — incurable short-lived
Explanation
External (economic) obsolescence caused by broad market decline affects all properties in a market and is typically incurable by the property owner. In a declining market, falling demand and prices create significant value loss that cannot be remedied through property improvements.
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