What happens to a property with reduced demand due to increased traffic flow?

When a property experiences reduced demand due to increased traffic flow, it is often affected by external obsolescence. This term refers to a loss in property value that occurs due to factors outside of the property itself, which are typically beyond the control of the homeowner or investor. Increased traffic can negatively impact the desirability of a location, leading to a decrease in demand as potential buyers or renters may find the area less appealing.

For instance, if a residential neighborhood becomes surrounded by heavy traffic, it may face issues such as noise pollution, reduced safety, and an overall decline in livability. As a result, the property values may decrease, reflecting this external factor. Understanding external obsolescence is crucial for evaluating real estate investments, as it highlights how changes in the surrounding environment can influence property value.