What do 'horizontal costs' in a property assessment context refer to?

In the context of property assessment, 'horizontal costs' refers to the expenses associated with the physical components of buildings, which are essential for determining the overall cost and value of a property. These costs typically include elements such as structural materials, fixture installations, and the necessary systems incorporated into the building, like plumbing and electrical. Understanding these components helps assessors accurately estimate property values based on the cost approach to valuation.

Horizontal costs specifically distinguish the costs linked to the building structures themselves from other types of expenses that may not directly affect the physical integrity or functionality of the building, such as utility costs, labor costs, or land costs. These other expenses, while important for overall real estate assessments and financial analyses, do not fall under the definition of horizontal costs in the same manner that building components do. This is why identifying building components for horizontal costs is critical in the assessment process.