How does physical deterioration impact property value?

Physical deterioration has a significant impact on property value primarily due to the loss of value associated with the wear and tear that occurs over time. As a property ages, various elements such as roofing, plumbing, and structural components may degrade, leading to a decline in its overall condition. This deterioration can result in decreased demand among potential buyers or tenants, knowing that they may incur additional costs for repairs and maintenance.

In the context of real estate, a property's market value is often directly linked to its physical condition. As the condition worsens, prospective buyers may be willing to pay less, reflecting their expectations of the costs and challenges involved in restoring the property to a favorable state. Therefore, the correct response highlights the adverse effects of physical deterioration on property value, emphasizing that neglect or structural issues tend to contribute to a decreased market appeal and worth.