What is 'physical deterioration'?

Physical deterioration refers to the loss in property value that results from the physical condition of the property itself. This can include wear and tear over time, such as aging, damage from weather, or neglect, which can lead to structural issues. When a property experiences physical deterioration, it typically becomes less appealing and functional, which directly impacts its market value.

This definition emphasizes the concept that the integrity of the physical structure of the property plays a critical role in its overall valuation. Unlike other options, which focus on external factors like market fluctuations, zoning changes, or economic conditions, physical deterioration is specifically concerned with the tangible, observable decline in a property's condition. Understanding this concept is crucial for appraisers as they assess the overall value of properties, taking into account how the physical state of a building contributes to its worth in the real estate market.