Economic obsolescence

[SANDY]

What are some ways to estimate economic obsolescence using market data?

 

[Meandering]

Depends on what you are trying to measure.

Temporary issues such as storm damage or more permanent issues such as highway noise.

.

 

[SANDY]

Depends on what you are trying to measure.

Temporary issues such as storm damage or more permanent issues such as highway noise.

.

Economic obsolescence not external obsolescence.

I doubt that any appraiser here can answer the question even remotely adequately but every appraiser should be able to account for the difference in the indicated values between their cost and market approaches due to the collapse of the housing market.

Prove me wrong! Take the challenge!

 

[Scott R Marshall]

You answered your own question. Assuming one has a reliable measure of site value and physical depreciation of the site improvements (along with external obsolescence of a different type and functional obsolescence if present), the difference between your cost approach and determination of market value determined by the sales comparison approach should be your economic obsolescence.

Give or take.

 

[CANative]

Economic obsolescence not external obsolescence.

I doubt that any appraiser here can answer the question even remotely adequately but every appraiser should be able to account for the difference in the indicated values between their cost and market approaches due to the collapse of the housing market.

Prove me wrong! Take the challenge!

Why don't you just dry up and blow away SANDY?

 

[Mr Rex]

Economic obsolescence is a subset of external obsolescence. Its pretty simple, account for physical and functional obsolescence, and all external that is not "economic" and the remainder is economic. Next.

 

[SANDY]

You answered your own question. Assuming one has a reliable measure of site value and physical depreciation of the site improvements (along with external obsolescence of a different type and functional obsolescence if present), the difference between your cost approach and determination of market value determined by the sales comparison approach should be your economic obsolescence.

Give or take.

Pretty good answer. But plugging a number in the cost approach for economic obsolescence that brings it in line with your market approach value represents at
best an adjustment based upon inference.

Are there other ways to utilize market data to calculate or measure the estimated economic obsolescence?

 

[SANDY]

Economic obsolescence is a subset of external obsolescence. Its pretty simple, account for physical and functional obsolescence, and all external that is not "economic" and the remainder is economic. Next.

Not good enough. Prove it with numbers not by inference.

 

[CANative]

Try reading The Appraisal of Real Estate, 13th Edition, Page 444.

And after that dry up and blow away.

 

[SANDY]

Looking for a quick way to estimate it without having to do full blown market study or statistically significant analysis.