Which type of depreciation considers external factors that impact property value negatively?

The correct answer focuses on economic obsolescence, which specifically addresses depreciation caused by external factors that negatively affect property value. This type of depreciation occurs when conditions outside the property itself result in a decline in value. Factors contributing to economic obsolescence may include changes in the local economy, such as increased crime rates, nearby industrial developments that detract from residential appeal, or shifts in market dynamics that reduce demand for properties in the area.

Understanding this type of depreciation is crucial because it reflects influences beyond the property owner's control, distinguishing it from other forms of depreciation. For instance, physical depreciation involves wear and tear on the property itself, while functional obsolescence relates to issues with the property's design or utility. Curable depreciation refers to costs that can be remedied or improved easily, allowing for restoration of value. Economic obsolescence, on the other hand, cannot typically be corrected through direct property improvements, making it unique in the realm of appraisal and property value assessments.