What term describes the loss of value due to a property's function or appearance becoming outdated?

The term that best describes the loss of value due to a property's function or appearance becoming outdated is functional obsolescence. This concept addresses situations where a property's design, layout, or features no longer meet current standards or preferences, leading to a decline in its market value.

For instance, if a home has a floor plan that is considered outdated or lacks modern amenities that buyers expect, it may be deemed functionally obsolete. This type of obsolescence stems from evolving consumer preferences and technological advancements, rather than physical condition.

In understanding the other terms, depreciation is a broader concept that includes all types of value reduction over time, while market obsolescence refers to value loss due to external economic factors affecting market demand. Physical deterioration is specifically about wear and tear or structural issues that reduce a property's value, rather than how societal trends or functional needs influence that value.