Investopedia

Continue to Site »

Functional Obsolescence

Filed Under »
Dictionary Says

Definition of 'Functional Obsolescence'

A reduction in the usefulness or desirability of an object because of an outdated design feature, usually one that cannot be easily changed.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.
Investopedia Says

Investopedia explains '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.

Articles Of Interest

  1.

    5 Mistakes Real Estate Investors Should Avoid

    Don't let a slow real estate market drag you down - steer clear of these pitfalls.

  2. 4 Types Of Home Renovation: Which Ones Boost Value?

    You think your updated house looks great, but potential buyers may not feel the same way.

  3. Uncover The Next Real Estate Hot Spot

    Real estate land speculation is a way to get in on a hot investment before a boom hits.

  4. What is a monopoly?

    Monopoly is a fun family game, but in real life, a monopoly can be dangerous to a country's economy. A monopoly occurs when an industry or sector has only one producer of goods or retailer for ...

  5. Weighted Average Cost Of Capital (WACC)

    Weighted average cost of capital may be hard to calculate, but it's a solid way to measure investment quality

  6. Capital Expenditures (CAPEX)

    Learn more about what it costs to produce goods.

  7. Working Capital

    Working capital is one of the basic metrics used to evaluate a company's financial health. Find out what it can tell you about a stock and learn how to calculate it.

  8. What is the difference between "hard money" and "soft money"?

    Hard money and soft money are terms that are often used to describe coin money and paper money, respectively. However, these terms are also used to refer to political contributions in the United ...
comments powered by Disqus
Marketplace
Hot Definitions

  1. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  2. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.

  3. Cost-Push Inflation

    A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials.

  4. Happiness Economics

    The formal academic study of the relationship between individual satisfaction and economic issues, such as employment and wealth.

  5. Affluenza

    A social condition arising from the desire to be more wealthy, successful or to "keep up with the Joneses." Affluenza is symptomatic of a culture that holds up financial success as one of the highest achievements.

  6. Icarus Factor

    The term Icarus factor describes a situation where managers or executives initiate an overly ambitious project which then fails. Fueled by excitement for the project, the executives are unable to reign in their misguided enthusiasm before it is too late to avoid the failure.
Trading Center