Which measure of time, with regard to depreciation, is the age a structure appears to be?

The concept of effective age refers to how old a property seems based on its condition and other factors, rather than its chronological age. It is an important measure in appraisal as it takes into account the property's actual physical wear and functional obsolescence compared to its expected lifespan.

Effective age can differ significantly from the actual age of a structure; for example, a building that has been well maintained or recently renovated may have an effective age that is much less than its chronological age. On the other hand, a poorly maintained building may exhibit signs of advanced age despite being relatively new.

In appraisal practices, effective age helps establish the depreciation applied to a property. It is crucial for appraisers to assess a property’s effective age accurately, as this contributes to determining its overall value and potential depreciation over time. This measure stands apart from terms like economic life, which refers to the total duration a property is expected to provide economically beneficial use, or physical life, which is the total estimated lifespan of a structure. Remaining economic life, similarly, considers how much longer a property can generate income.

Understanding effective age is valuable for appraisers and real estate professionals when assessing depreciation, market value, and making informed decisions about property investments.