California Real Estate Practice Exam

By definition, economic obsolescence would not apply to which of the following?

1. Antique fixtures in a building

2. Location of a government building adjacent to the property

3. Neighborhood reconstruction projects

4. Regulatory changes

The correct answer is: Antique fixtures in a building

Economic obsolescence refers to the loss of value in a property due to external factors that are not necessarily related to the property's physical condition. This can include elements such as changes in the economy, neighborhood decline, or regulatory adjustments that negatively impact property value. Antique fixtures in a building do not typically relate to external economic factors. Instead, they pertain to the unique attributes of the property itself, which can enhance or detract from its value based on buyer preferences but don't stem from external economic influences. These fixtures might age or become less desirable over time, but this situation falls under physical obsolescence rather than economic obsolescence. In contrast, the other choices highlight external factors that can lead to economic obsolescence. For example, a government building’s location can affect nearby property values negatively, neighborhood reconstruction projects may lead to temporary disruptions or a decline in desirability before improvements take effect, and regulatory changes can impose restrictions that reduce a property's marketability or potential uses. Therefore, those examples illustrate how externalities might diminish property value, making them relevant to economic obsolescence.