What does the term economic or external influences refer to in property appraisal?

The term economic or external influences in property appraisal specifically pertains to external market factors that can affect a property's value. These influences can include a wide range of elements such as the overall economy, interest rates, employment rates, demand and supply dynamics, and neighborhood trends. For instance, changes in the local economy can influence property demand and, subsequently, its value. If the economic conditions improve, more people may be looking to buy homes, driving property values up. Conversely, during economic downturns, property values may decrease due to reduced demand.

Understanding these external influences is critical for appraisers as they assess a property's market value, ensuring that they consider not just the property itself but its context within the larger economic environment. This holistic view allows for a more accurate appraisal that reflects real-world conditions impacting value.