Which of the following best describes depreciation?

Depreciation is defined as a decrease in property value over time, often due to factors such as wear and tear, deterioration, or changes in market conditions. This concept is crucial in real estate, as it impacts the financial analysis of properties, tax considerations, and investment decisions. Understanding depreciation allows real estate professionals to evaluate the true value of a property and make informed decisions regarding buying, selling, or maintaining an asset.

The other options describe scenarios that are contrary to the nature of depreciation. An increase in property value is not applicable, as depreciation specifically involves a reduction in value. The process of property appraisal relates to the determination of a property's value rather than a decrease in that value. Similarly, an increase in property appreciation refers to the growth in value over time, opposing the concept of depreciation, which encompasses loss rather than gain.