If two properties have the same construction costs but different values, what is likely the cause?

When two properties have the same construction costs but different values, functional obsolescence is often a significant contributing factor. Functional obsolescence refers to the loss of value due to outdated features or design inefficiencies that do not meet current market demands or preferences. For instance, a property with an outdated layout, such as a lack of modern amenities or a floor plan that does not fit the needs of today's buyers, can experience a decrease in value despite having the same construction costs as a more functional or updated property.

This concept highlights that value is not solely determined by material costs but also by how well a property meets the preferences and needs of the market. Therefore, properties that have similar construction costs may differ in value if one has advantages in functionality, design, or appeal compared to the other.