External obsolescence is a factor that reduces the value of an improvement because of something external to the property itself. It refers to something outside of the home that is causing a lower property value.
Here are five examples of external obsolescence:
1. Busy Road: This is a very common example of external obsolescence because we can see it in virtually every community to some extent. Homes on busy corners, on main streets or near freeways suffer from extra noise and traffic, both of which impact property values. 2. Commercial buildings: Residential and commercial uses tend to not mix well in suburban areas. It's usually a negative factor when houses are located next to restaurants, retail, gas stations, etc. 3. Construction of a landfill next to a neighborhood: This can impact the entire neighborhood (not just one house) due to the smell or even the noise of large garbage trucks moving in and out. 4. Railroad tracks: Properties located near railroad tracks will suffer a hit when it comes to home values due to the noise factor. Same goes for properties close to an airport and airplanes' flight paths. 5. High-Voltage Towers: A view of nearby power towers usually results in a hit to property value.