A motel is the subject of an appraisal and it is determined that a rerouting of a county highway has limited customer access to the motel. This is an…

The loss in value to the motel is caused by the rerouting of a county highway, a factor that is external to the property itself and beyond the owner's control. This type of depreciation is known as economic obsolescence (also called external obsolescence). It arises from negative influences outside the property lines, such as changes in public infrastructure, adverse zoning, or neighborhood decline. Since the owner cannot fix the highway's route, this form of obsolescence is considered incurable.

B. regression: This is a principle of value stating a superior property's value is negatively affected by surrounding lesser properties, not a direct type of depreciation from an infrastructure change.

C. functional obsolescence: This refers to a loss in value due to defects within the property's own design, layout, or features (e.g., an outdated kitchen or a poor floor plan).

D. landlocked property: This term applies to a property with no legal access to a public way. The question states access is "limited," not completely eliminated.

1. The Appraisal Institute. (2020). The Appraisal of Real Estate (15th ed.). Chicago, IL: Appraisal Institute. In Chapter 38, "Depreciation," external obsolescence is defined as "a loss in value from causes outside the property itself." The text provides examples such as changes in a neighborhood's economic base or "detrimental reliance on a single industry or transportation system" (p. 661).

2. Massachusetts Board of Registration of Real Estate Brokers and Salespersons. (2018). Real Estate Candidate Information Bulletin. PSI Services LLC. The required curriculum outline under section "II. Property Valuation and Appraisal" mandates knowledge of the "three approaches to value" and "concepts of depreciation (physical deterioration, functional obsolescence, economic obsolescence)," confirming this is a core competency.

3. Geltner, D., Miller, N. G., Clayton, J., & Eichholtz, P. (2013). Commercial Real Estate Analysis and Investments (3rd ed.). OnCourse Learning. Chapter 10, "The Valuation of Income Property: The Cost Approach," defines external obsolescence as value loss from "locational and economic factors that are external to the property," citing "changes in traffic patterns" as a classic example.