Which of the following is an example of functional obsolescence?

Functional obsolescence refers to a reduction in a property's desirability or usefulness due to changes in design or functionality that no longer meet current standards or preferences. Option B, which relates to changing tastes in property design, perfectly illustrates this concept. As design preferences evolve over time—emphasizing open floor plans, modern amenities, or sustainable practices—properties that do not align with these trends can become less desirable, regardless of their physical condition.

This type of obsolescence highlights how market demands and cultural shifts affect the value of real estate. For instance, a house with a closed-off, compartmentalized layout may be viewed as outdated compared to a more contemporary, open concept design. Consequently, even if the property is structurally sound, its appeal can significantly diminish based on shifts in aesthetic values or functionality expectations.

Other options relate to different concepts; wear and tear from use refers to physical deterioration, external environmental factors touch on influences outside the property’s characteristics, and structural damage from natural disasters points to catastrophic impacts rather than design-related changes. Each of these elements affects property value but does not classify as functional obsolescence.