California Real Estate Practice Exam

A change in the flight patterns of an airport creates excessive noise over an apartment building, resulting in increased vacancies and loss of property value. This loss of value is called:

1. Economic obsolescence

2. Ecological obsolescence

3. Functional obsolescence

4. Physical deterioration

The correct answer is: Economic obsolescence

The situation described involves a change in external conditions—in this case, noise from altered flight patterns—leading to a decline in desirability and value of the property. This type of depreciation is classified as economic obsolescence, which occurs when an external factor negatively impacts property value. Economic obsolescence is typically attributable to circumstances beyond the control of the property owner, such as changes in the surrounding environment, zoning laws, or, as in this case, airport operations. In contrast, ecological obsolescence refers to depreciation caused by environmental factors that negatively affect living conditions, while functional obsolescence pertains to reductions in value caused by an outdated design or inadequate features that do not meet current market standards. Physical deterioration involves the wear and tear of the property itself, which is a result of age and lack of maintenance. Each of these other factors differs fundamentally from the scenario presented, where the external noise from the airport is the primary catalyst for decreased property value.