Obsolescence

In conventional usage, obsolescence is a condition of being out-of-date, or old-fashioned. An obsolete item—a tool, for example—is not necessarily dysfunctional, broken, or worn-out, but its performance does not meet current expectations. Changed expectations may result, for example, from enhanced capabilities of newer products, changes in regulatory requirements, or a shifting character of demand for particular goods or services, reflecting people's preferences and awareness of available choices. Obsolescence in housing influences market values and the evolution of urban areas.

Obsolescence is distinct from the deterioration of functionality associated with age, wear, or lack of maintenance. Obsolete things continue to function, albeit at levels below contemporary standards. A state of poor repair by itself is not obsolescence; however, deferral or neglect of maintenance may be a symptom that particular items are viewed as being obsolete. Such deferral or neglect may accelerate obsolescence by encouraging users, owners, and managers to judge that an item's useful service life is ending.

From the economist's perspective, obsolescence is reflected in declining returns to capital of older vintage. Older machines or buildings are presumed to be less productive or efficient than newer ones. The older items nevertheless will continue to be employed until they fail completely to function as required or the disadvantages of their continued use outweigh the costs of their updating, retrofit, or replacement.

In practical terms, the decision to replace or refurbish obsolete facilities or equipment is a matter of judgment rather than necessity. How the judgment is made will depend on both the decision-maker's expectations and the capabilities of the obsolete item. Some producers have been notably successful in using planned obsolescence to build demand for new products by periodically changing superficial design details or adding new functions and features to render older models obsolete. Such changes seek to raise users’ expectations of the products’ performances and reduce the products’ expected service lifetimes. Expected service lifetimes for housing are typically long compared to other products, measured in decades. Various parts of an individual dwelling typically have different expected lifetimes; some may become obsolete and will be replaced by owners or occupants with more up-to-date components. The individual dwelling's obsolescence is thereby deferred.

A complex interplay of such characteristics as structural design, construction materials, mechanical equipment, fittings and finishes, location, and age of dwellings may cause buyers and sellers in property markets or government authorities to judge that a particular stock of housing is generally obsolete. Such obsolete stock may be converted to different usage, abandoned, or demolished if it is not updated. New technology, a leading cause of obsolescence in housing, influences the scope and levels of services dwelling occupants and owners expect. Introduction of electricity and widespread adoption of central heating and air conditioning, for example, made obsolete those dwellings with older systems.

[Page 530]New roofing and sheathing materials, thermally insulating windows, and water-conserving plumbing fixtures have a similar effect. Older structures made obsolete by such new technology are likely to have reduced sale and rental values. Building codes, design standards, product-acceptance criteria, and other regulatory requirements are similar to new technology as a cause of obsolescence. Responsible agencies in areas exposed to high seismic or storm hazard, for example, may adopt codes with design and construction standards to reduce risks of catastrophic structural failures. Similarly, many building codes seek to protect public health by prohibiting use of asbestos and lead-based paints. Aluminum electrical wiring, a once popular lower cost alternative to copper, now is widely banned as a fire hazard. New regulatory requirements are often applied first and sometimes exclusively to new construction, and older structures—presumably more damage prone and hazardous to occupants’ health—become obsolete. In contrast to technology and regulations, shifting characteristics of demand that cause housing obsolescence are less easily identifiable but no less effective in altering the types and locations of dwellings particular segments of a housing market consider to be desirable. Increasing numbers of young office workers as a fraction of the population in a city, for example, may render obsolete the housing originally designed to accommodate moderate-sized traditional families with children. Fashion trends may also alter the demand for dwellings reflecting particular styles of architecture and interior design. Newly constructed housing will generally meet the current expectations of owners and occupants. Substantial new construction is then often a factor contributing to obsolescence of older housing stock. Widespread housing obsolescence may encourage the materials and construction industries to develop new products and services that facilitate retrofits of the older dwellings.

...