A low-cost apartment building has been remodeled with very expensive high-end plumbing fixtures, creating a super-adequacy for the structure. This would be an example of which obsolescence?

• A. Economic obsolescence
• B. Physical deterioration
• C. External obsolescence
• D. Functional obsolescence

Answer: (D)

The main idea is functional obsolescence caused by over-improvement or super-adequacy. When a property is upgraded with features that are far more expensive or luxurious than the market will pay for in that property type, those features don’t add proportional value. Here, a low-cost apartment building was remodeled with very expensive plumbing fixtures, creating a level of luxury that the market for that property doesn’t support. The result is a mismatch between the cost of the upgrades and the value they add, which is the essence of functional obsolescence.

External obsolescence would involve factors outside the property’s walls or immediate surroundings that drag value down (like a declining neighborhood or nearby undesirable uses). Physical deterioration would be wear and tear or damage to the structure. Economic obsolescence would stem from broader external economic conditions affecting value. None of those apply here; the issue is the internal design and market alignment, hence functional obsolescence.