A property’s value may decrease due to outdated features or design, which is a case of:

The correct choice highlights a specific type of depreciation known as functional obsolescence. Functional obsolescence occurs when a property’s features or design become outdated or less desirable to current market preferences. This can happen for various reasons, including changes in technology, shifting consumer preferences, or the introduction of new building codes that render older designs less practical.

For example, a home with a closed floor plan may be considered less desirable today compared to more contemporary homes featuring open layouts. This decrease in appeal can lead to a reduction in the property’s market value because potential buyers may be unwilling to pay the same price for a home with features that do not meet their needs or expectations.

In contrast, the other choices do not capture this specific type of value loss. Market excess refers to an oversupply of properties in a market, which can lead to price decreases but is not specifically tied to outdated features. Under-improvement references situations where a property does not maximize its potential or value due to insufficient upgrades or enhancements. Investment shortfall describes a scenario where the expected return on an investment does not meet the required or desired levels, which is not directly related to the characteristics of the property itself but rather to the financial performance of an investment.

Thus, functional obsol