Definition of economic obsolescence

loss of value from all causes outside the property itself. Also known as environmental obsolescence and external obsolescence.

Example: An expensive private home may drop in value when an industrial plant is built nearby. This is a form of economic obsolescence that must be considered in the appraisal of the property. Causes of economic obsolescence are numerous. Noisy or unattractive highways and industrial plants cause a loss in value to nearby residences; the rate-making authority of a public utility or railroad can cause economic obsolescence to almost every railroad or public utility; polluted waterways, swamps, and obstructions of views have an adverse effect on the value of nearby property.