Economic Life
The period over which improvements contribute value to the property — ending not when the building collapses, but when it no longer adds value above land. Maintenance and renovation extend it; neglect shortens it.
Related Terms
Remaining Economic Life
The estimated number of years a property's improvements are expected to continue contributing to the property's value, calculated as total economic life minus effective age..
Effective Age
The age of a property as indicated by its condition, maintenance, and updates, which may differ from its actual (chronological) age.
Age-Life Method
The simplest depreciation technique: effective age divided by total economic life, applied to cost new.
More in Valuation Approaches
View allSales Comparison Approach
A valuation method that estimates a property's value by comparing it to similar properties that have recently sold in the same market area.
Cost Approach
A valuation method that estimates value by calculating the cost to reproduce or replace the improvements, subtracting accrued depreciation, and adding the land value.
Income Approach
A valuation method that estimates a property's value based on the income it generates or is expected to generate.
Market Value
The most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus..