What term describes the loss of property value caused by negative external forces beyond the owner's control?

The term that describes the loss of property value caused by negative external forces beyond the owner's control is external obsolescence. This concept refers specifically to a decline in property value due to factors that are external to the property itself, such as changes in the surrounding environment, economic downturns, or shifts in demographic trends. Unlike physical obsolescence, which pertains to deterioration due to age or wear, external obsolescence is driven by outside influences that the property owner cannot directly manage.

For instance, if a new highway is built nearby that brings heavy traffic noise or if a factory opens up that pollutes the air, these factors can diminish the attractiveness of the neighborhood and, consequently, the value of properties within it. This makes external obsolescence a crucial element to consider in property valuation and real estate investment, as it can have significant implications for an owner's financial interest in their property.