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Functional obsolescence is a reduction in the usefulness or desirability of an object because of an outdated design feature, usually one that cannot be easily changed.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. Personal Finance

    Strategic Bathroom Enhancements With Huge Returns

    Even modest investments to improve a small bathroom can yield considerable rewards.
  2. 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.
  3. Personal Finance

    Introduction

    It’s 6:30 a.m. and you’re waiting for a bathroom – again – hoping you won’t be late to work. Two bathrooms used to seem like enough for four people, but then your ...
  4. Personal Finance

    6 Things You Think Add Value To Your Home - But Really Don't

    Not everyone wants to spend their weekends shaping backyard topiaries. Even though you may enjoy the improvements you make to your house, it doesn't mean that they'll increase its value.
  5. Personal Finance

    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.
  6. Personal Finance

    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.
  7. Personal Finance

    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.
  8. Personal Finance

    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 ...
  9. Personal Finance

    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.
  10. Retirement

    3 Luxurious Massachusetts Retirement Communities

    Learn why Massachusetts is favored among certain retirees, and discover more about some of the most luxurious retirement communities in the state.
RELATED FAQS
  1. Should we buy a new house or stay mortgage free?

    I have a house that is valued at $80,000. We would like to move, but because of this market we would break even. The home ... Read Answer >>
  2. 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 >>
  3. 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 >>
  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. 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 >>
  6. 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 >>
Hot Definitions
  1. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  2. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  3. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  4. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  5. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  6. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
Trading Center