What is the term for a decrease in the value of a property over time?

Depreciation refers to the decrease in the value of a property over time, often due to factors such as wear and tear, aging, market conditions, or changes in the neighborhood. Understanding depreciation is crucial for mortgage loan officers, as it can affect property valuations, lending assessments, and the overall housing market.

This concept is particularly relevant when evaluating a property's potential resale value and calculating the equity a homeowner has in the property. For instance, if a property has depreciated significantly, the homeowner may owe more than the property's current market value, impacting their ability to refinance or sell.

Appreciation, on the other hand, is the opposite of depreciation and refers to the increase in value of a property. Market correction involves a shift in property values that can affect both appreciation and depreciation but is not specifically about the decrease in value. Capital loss generally refers to a financial loss incurred when an asset is sold for less than its original purchase price, which can be a result of depreciation but is a broader term that applies to various investments beyond real estate.