What does the term 'economic life' refer to in real estate appraisal?

The term 'economic life' in real estate appraisal specifically refers to the duration for which a property can generate income. This concept takes into account the practical and financial viability of the property, suggesting that over time, buildings may experience declining capacity to produce income due to factors like market conditions, wear and tear, and changes in demand.

Economic life is crucial in determining the value of a property, particularly when using the income approach to appraisal. This approach assesses how much income a property can produce over its economic life, which helps appraisers estimate its worth based on potential future earnings. Thus, this definition emphasizes the relationship between the property’s revenue-generating potential and its lifespan in a market context, distinguishing it from just the physical age or longevity of the building itself.

The other options focus on different aspects of a building's lifespan or value, but do not directly relate to the financial implications of generating income, which is the essence of economic life in real estate appraisal.