Illinois Real Estate Practice Exam

Where is the economic obsolescence likely observed when a residence is situated near a noisy factory?

1. In the property's increased market value

2. In the property tax assessment

3. In the nearby factories

4. In the property's reduced desirability

The correct answer is: In the property's reduced desirability

The correct choice highlights the impact of economic obsolescence on a property's desirability due to external factors. Economic obsolescence refers to the loss of property value stemming from external conditions that negatively affect the property, which are beyond the property owner's control. In this case, a residence located near a noisy factory is likely to experience reduced desirability among potential buyers or renters because the factory's noise can create an unpleasant living environment. This diminished desirability results in a decline in market value, as buyers typically seek properties that offer peaceful surroundings. This understanding of economic obsolescence is crucial in real estate, as it emphasizes the influence that external factors can have on property values. The other options do not address how external factors like noise pollution from a factory directly impact demand and desirability for residential properties. Specifically, increased market value cannot realistically occur in this situation, property tax assessments are usually reflective of market values after such factors are considered, and while nearby factories contribute to the issue, they do not embody the consequence of the obsolescence itself.