Functional Obsolescence

What is 'Functional Obsolescence'

Functional obsolescence is a reduction in the usefulness or desirability of an object because of an outdated design feature, usually one that cannot be easily changed. The term is commonly used in real estate, but has a wide application.

BREAKING DOWN 'Functional Obsolescence'

An original house in an older part of town that has two bedrooms and one bathroom could be considered functionally obsolete if all the other original homes in the area are torn down over the years and replaced with five bedroom, three bathroom houses. Because the old house does not have the features that most modern buyers want, it is said to be functionally obsolete, even if it is still in good condition and is perfectly livable.


As another example, many home entertainment centers became functionally obsolete as flat-panel televisions replaced bulky analog televisions. The old entertainment centers were too deep to accommodate the new, thin televisions.

RELATED TERMS
  1. Obsolescence Risk

    The risk that a process, product or technology used or produced ...
  2. Legacy Asset

    An asset that has been on the company's books for a long period ...
  3. Succession

    The action of one party, person or product being replaced by ...
  4. Planned Obsolescence

    A manufacturing decision by a company to make consumer products ...
  5. Functional Currency

    The primary type of money that a company uses in its business ...
  6. Aggregate Function

    A mathematical computation involving a set of values rather than ...
Related Articles
  1. Home & Auto

    Homebuyers' Walkthrough: Buying New Versus Previously-Owned

    One of the major choices that homebuyers face is whether to buy a new home or one that has been previously owned and lived in. Buyers may wish to consider the following factors when making a ...
  2. Home & Auto

    Homebuyers' Walkthrough: Considerations When Buying A Home

    The search for the perfect home requires buyers to make decisions regarding how they would like to approach the process, the markets they wish to explore, and which features they need and want. Real ...
  3. Home & Auto

    Strategic Bathroom Enhancements With Huge Returns

    Even modest investments to improve a small bathroom can yield considerable rewards.
  4. Retirement

    Pittsburgh's 5 Best Retirement Communities

    Discover why many retirees are settling in Pittsburgh; read about several retirement communities in the area and their attractive qualities.
  5. Home & Auto

    Cost Breakdown Of A Bathroom Remodeling Project

    When figuring out the size of your budget for your bathroom remodeling project, consider whether you'll hire a pro, and the type of purchases you'll make.
  6. Home & Auto

    How To Stage Your Home For A Quick Sale

    Learn how to make your house appealing to the largest number of buyers and increase your chances at a fast sale.
  7. Home & Auto

    Top 5 Home Renos For Your Money

    Here are five renovations that return most of your investment when it’s time to sell your home.
  8. Home & Auto

    5 Ways an Open House Can Actually Hurt Your Home Sale

    Open houses have long been a way to get exposure for a home that's up for sale. But it turns out it may be more trouble than it is worth.
  9. Home & Auto

    8. Update Bathroom Fixtures

    These home upgrades can be achieved for surprisingly little money.
  10. Home & Auto

    Why Housing Costs Shouldn't Exceed 30% of Your Budget

    Financial experts will argue that there’s no problem with allocating 50% of your net income to housing, but that barely leaves enough money for living comfortably. Reducing housing expenses to ...
RELATED FAQS
  1. What is the utility function and how is it calculated?

    Learn what the utility function is in microeconomic theory and how it is calculated based on a functional form that represents ... Read Answer >>
  2. What are some common functions of business intelligence technologies?

    Understand the common functions of business intelligence technologies, and learn how business intelligence is used to increase ... Read Answer >>
  3. Which has performed better historically, the stock market or real estate?

    Find out why stocks have historically performed better than real estate in U.S. history, why this makes sense, and why the ... Read Answer >>
  4. What economic indicators should an investor in the real estate sector consider?

    Find out about economic indicators and which indicators investors in the real estate sector should take into account before ... Read Answer >>
  5. How can I calculate the hurdle rate in Excel?

    Learn how to evaluate potential investments. Common desktop software provides functions that can help make the decision with ... Read Answer >>
  6. How have low interest rates affected the real estate sector?

    Learn how low interest rates stimulate the real estate sector by making it more affordable to borrow money to invest in real ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center