Which of the following best describes functional obsolescence?

Functional obsolescence refers to a decrease in a property's value due to design features that are no longer deemed desirable or efficient by current standards. As tastes, preferences, and technology evolve, certain features of a property may become outdated or inefficient compared to modern alternatives. For example, a home with a very small kitchen might suffer from functional obsolescence if current buyers prefer open-concept layouts. This concept highlights how a property's design can impact its marketability and value, independent of its physical condition or external factors.

The other options touch on different aspects of property value but do not capture the essence of functional obsolescence. Changes in the market that affect property value relate more to economic conditions than to the property's inherent characteristics. Physical wear and tear focus on the structural deterioration of a property rather than shifts in desirability related to design. External conditions affecting property use involve influences from the surrounding environment, such as zoning changes or neighborhood trends, but do not specifically address how a property's internal design impacts its value.