Economic obsolescence in real estate refers to the loss of property value due to external factors outside the property itself. For instance, an expensive private home may lose value if an industrial plant is built nearby. This factor must be considered during the property's appraisal.
Physical depreciation or deterioration refers to the loss of value from all causes of age and action of the elements. It encompasses breakage, deferred maintenance, effects of aging on construction materials, and normal wear and tear.
