When can property be declared to have functional obsolescence?

Functional obsolescence occurs when a property becomes less desirable due to outdated designs, technologies, or features that no longer meet current market preferences or standards. This can result from various factors, such as changes in building codes, advancements in technology, or shifts in consumer preferences. For example, a home with one bathroom in an area where most homes now have at least two or a property that lacks modern amenities like central air conditioning might be considered functionally obsolete. This concept highlights how properties can lose value not because of physical deterioration or external market trends, but rather due to their failure to meet contemporary expectations or needs.

In contrast, physical damage pertains to tangible issues, such as structural problems or decay, which fall under a different category of obsolescence. An increase in value does not relate to obsolescence; it indicates a property is actually appreciating. Selling at a loss similarly indicates market conditions or price strategy rather than inherent qualities of the property leading to functional obsolescence.