Which type of obsolescence is caused by advancements in technology or market preferences?

The concept of functional obsolescence refers specifically to issues that arise from the design of a property or its features becoming outdated or less desirable due to advancements in technology, changes in market preferences, or shifts in consumer behavior. This type of obsolescence occurs when a property no longer meets the needs or expectations of buyers and tenants, often resulting in a reduction in value.

For instance, a home with outdated kitchen designs or insufficient energy efficiency might be considered functionally obsolete if modern trends favor open-concept layouts or eco-friendly appliances. Therefore, advancements in technology and changing preferences can adversely impact the property's appeal, contributing to functional obsolescence.

The other options represent different concepts. Physical deterioration relates to the wear and tear of a property over time due to neglect or lack of maintenance, which doesn't involve changes in market or technology. External obsolescence, on the other hand, stems from external factors, such as changes in the neighborhood or local economy that negatively affect property value. Property depreciation is a general term that encompasses the loss of value over time for any reason, but it is not specific to the advancements in technology or market preferences that define functional obsolescence. Thus, functional obsolescence is the correct choice in the context of advancements in technology