When is a property considered to have reached its economic life?

A property is considered to have reached its economic life when its maintenance costs exceed the value that the property can generate. This point typically indicates that the income-producing potential of the property is no longer sufficient to justify the cost required for upkeep and improvements. At this stage, the financial viability of maintaining the property becomes questionable, and it can lead to a decline in overall value.

Economic life differs from physical life, as economic life focuses on the property’s ability to generate returns and remain viable in the market. Understanding this concept is crucial for appraisers as it helps them assess when a property may not be a sound investment anymore and when it might be time to consider redevelopment or disposal.

While the other options relate to aspects of property condition or market dynamics, they do not directly address the economic thresholds defining the end of a property’s economic life. For example, deterioration might initiate decline but does not alone determine economic viability; market demand influences value but doesn't necessarily indicate maintenance costs; and full depreciation is more a matter of accounting than of practical economic performance within the real estate market.