Which factor can cause a property to be considered over-improved?

A property is considered over-improved when the enhancements made exceed what is typical or desirable within the neighborhood or market context. When excessive upgrades are performed beyond the standards commonly found in the area, they can lead to a scenario where the property value does not align with that of similar properties nearby. This might mean that while the upgrades may be luxurious or of high quality, they do not add commensurate value in the current market.

For instance, if a homeowner installs a bespoke swimming pool or transforms their residence into a high-end entertainment space when most homes in the area are modest and serve basic needs, the improvements may become more of a personal preference than a financial asset. Buyers in that neighborhood may not be willing to pay a premium for features that are not mirrored in the local market. As a result, the property's value can stagnate despite its high-quality upgrades, leading to the classification of it being over-improved.

The other factors provided do not adequately encapsulate the essence of over-improvement. High-quality materials can be necessary for construction without necessarily equating to over-improvement if they align with market expectations. Current market demand dictates property values but does not directly affect the improvement level. Lastly, environmental factors can influence a property's appeal but do