By Markian Melnyk, Realtor
Obsolescence in real estate affects value and is important to understand. There are different kinds of obsolescence – some can be fixed; others cannot.
A home that is functionally obsolete might have a design or features that are outdated by modern standards. For example, a three-bedroom, one bath house would not be desirable. Most buyers want at least two baths to avoid morning congestion.
Economic obsolescence occurs when forces external to a property decrease its value. Think about how an airport expansion or a sewage treatment plant affect the character of a neighboring residential neighborhood, or the loss of a major employer, driving down home values in the affected community.
Finally, physical obsolescence occurs when home systems deteriorate due to lack of maintenance or repair causing a substantial decrease in value. Old and dangerous wiring and rotting woodwork are examples of factors contributing to physical obsolescence. I’ve seen many homes in Baltimore where gutters were ignored long enough to allow water to damage foundations and buckle walls. The high cost of repair and the risk of further hidden damage made these properties problematic investments.
In evaluating the purchase of a property with signs of obsolescence first ask yourself, “Can I fix it?” A three bed, one bath property might be convertible to a two bed, two bath home. If the cost of the upgrade doesn’t take the total investment beyond the value of comparable homes in the neighborhood, purchasing it may be a good move.
Economic obsolescence, however, is probably impossible for the individual homeowner or investor to remedy. Larger, community-wide factors are dragging property values down and it’s likely that broad, community-based solutions will be needed to fuel a recovery.
So, it’s wise to pause before embarking on major home improvements to consider how they will position your property within your neighborhood. Particularly if you may be moving in a few years, you’ll want to compare the investment today to what you may recover in increased sales price at the time of sale.
Upgrades to increase curb appeal rather than major projects often give the greatest return. Zillow found that the best projects include garage door replacements (up to 349% ROI), steel entry door replacements (216%), and minor kitchen remodels, with improvements like painted cabinets, updated appliances and countertops (up to 113%).
Other lower-cost improvements that give buyers the impression that a home is well maintained include landscaping and a fresh coat of paint on the front door and interior. Color preferences change so it makes sense to research the latest trend. Zillow found in 2025 that buyers prefer a black front door to one painted gray and would pay $6,450 more for it.
It pays to consider the cost and value of improvements to any property. Think about improvements not just in the context of your preferences but also take the perspective of future home shoppers who will see your home as one of many other homes on the market.
