A large, expensive home is constructed in an area consisting entirely of much smaller and less valuable homes. Even before the larger home is sold by the developer, it has probably suffered a loss in value due to:
A. deferred maintenance
B. physical deterioration
C. functional obsolescence
D. economic (or external) obsolescence
Answer: D. economic (or external) obsolescence
Explanation: The home's value is probably going to be lowered as a result of regression. This value loss, due to location, is an example of economic obsolescence (also called external obsolescence).
Business
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