Which type of depreciation is considered the most difficult to correct?

The correct answer is economic obsolescence, which is considered the most difficult type of depreciation to correct. Economic obsolescence refers to a loss in property value due to external factors that are typically outside the property owner’s control, such as changes in the economy, neighborhood decline, or shifts in industry and demographics. Because these factors are related to the external environment, they cannot be remedied through improvements to the property itself.

In contrast, curable physical deterioration involves repairs or renovations that can be made to improve the property, making it easier to address. Functional obsolescence relates to a loss in value due to outdated features or poor design, which can often be rectified through renovations or updates. External obsolescence is a more specific type of economic obsolescence, focusing on factors directly surrounding the property, but still represents challenges that are generally more manageable than economic influences affecting the broader market.

Given that economic obsolescence stems from external market conditions, it remains a persistent and often intractable issue for property owners, as it may involve long-term economic trends or conditions that are difficult to remedy directly.