What is meant by "economic obsolescence"?

Economic obsolescence refers specifically to a reduction in property value that occurs due to external economic factors that are beyond the property owner's control. This can include changes in the local economy, shifts in demographic trends, new regulations, or developments in surrounding areas that negatively affect desirability and property values.

When a property experiences economic obsolescence, it's often due to circumstances such as a decline in the neighborhood, the relocation of major employers, or increased crime rates, which can all lead to a depreciation of property values that is not due to the property's intrinsic characteristics.

The other choices involve different concepts related to property value. Loss of property due to natural disasters relates to physical damage rather than economic factors. Reduced market demand for property, while it can be influenced by economic obsolescence, does not specifically capture the external causes leading to decreased value. Improvements made to alter property use address modifications done to the property itself rather than factors external to the property that could cause a decline in value.