What term describes the loss in value resulting from a decrease in utility and desirability due to external factors?

The correct term that describes the loss in value resulting from a decrease in utility and desirability due to external factors is external obsolescence. This phenomenon occurs when the value of a property declines due to circumstances outside of its control, such as changes in the neighborhood, local economy, or environmental factors. For instance, if a nearby factory opens and produces pollution or noise, it can render adjacent properties less desirable, thus decreasing their market value.

This concept emphasizes that the causes of depreciation can stem from external influences rather than flaws in the property itself. Recognizing external obsolescence is crucial in property appraisal as it influences the overall assessment of a property's worth and the strategies for maintaining or enhancing its value.