Which term describes the total time an improvement can be economically beneficial?

The correct term that describes the total time an improvement can be economically beneficial is economic life. This concept refers to the period during which a property will yield an income or maintain value. Beyond its economic life, a property might still exist physically but typically does not contribute positively to the owner’s financial returns or overall value.

In real estate appraisal, understanding economic life is crucial as it helps appraisers assess the viability of properties and makes informed decisions regarding investments. This term encompasses factors such as market conditions, potential income, and the impact of depreciation on a property. Recognizing the economic life of an improvement aids in determining its value and future performance in the market.

Other terms, while relevant in their contexts, do not accurately define the span of time that an improvement remains economically beneficial. For instance, effective age assesses the condition of a property based on its wear and tear compared to its chronological age. Physical life describes the total period a structure can exist before it physically deteriorates, omitting the economic perspective. Functional obsolescence relates to a loss in value due to inefficiencies or outdated design features rather than the overall economic contribution of the improvement over time.