Property Valuation
In Oregon, an appraiser is valuing an older historic home in Portland's Irvington neighborhood. Which depreciation type would best describe the loss in value from a small bedroom that cannot be enlarged due to the historic designation?
APhysical deterioration
BFunctional obsolescence — incurable✓ Correct
CExternal obsolescence
DFunctional obsolescence — curable
Explanation
Functional obsolescence that cannot be economically corrected is incurable. A bedroom that is too small by modern standards but cannot be enlarged due to a historic designation is a classic example of incurable functional obsolescence — the deficiency exists but the cost of cure exceeds the value it would add, or is physically/legally impossible.
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