Definition of "Property appreciation"

Michael Grace real estate agent

Written by

Michael Graceelite badge icon

Berkshire Hathaway HomeServices Realty Results

Appreciation, or property appreciation in real estate is the increase in the value of a property or asset over time. This increase in value can be due to a number of factors; inflation, population growth, economic growth of an area, etc. Property appreciation can occur under a variety of different circumstances and with virtually any piece of real estate. Appreciation is the opposite of depreciation. Let’s explore some examples of appreciation in real estate. 

 

Examples of property appreciation in real estate

 

Joan is a young woman in her early 30’s. After finishing a masters degree in finance, Joan finds an excellent job with a good salary at a stock brokerage company. As she nears her mid thirties, her house is paid off and she has saved up a tidy sum of money. With her savings, Joan invests in a cozy little bungalow in the suburbs, spending a reasonable sum of $125,000. 

 

After finding a tenant and contracting a property management service, Joan begins to reap the rewards of her investment. However, after a few years of being a landlady, Joan tires of the responsibility and stress of maintaining the property, and decides to sell. After contacting a real estate agent and finding a buyer, Joan manages to get $225,000, making a tidy profit of $100,000. 

 

The cause for this higher price is what is known as property appreciation. During the time that Joan had owned the house, a mall had been built nearby, a new movie theatre opened and an office complex newly constructed. The resulting demand for housing caused the value of Joan’s house to go up, without her even having to do anything.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Real Estate Terms

A proposal to buy property at a specified price. The seller of the property has the options of accepting the offer, rejecting it, or making a counteroffer. For example, John signs a listing ...

Factor employed by real estate agents or appraisers to determine the change needed in operating income to obtain a desired rate of return. It is used to evaluate income-producing property. ...

Reduction of part of the balance of property by charging an expense or loss account. The reason for a write-down is that some economic event has occurred indicating that the asset's value ...

Descriptive of the architectural development of property in a certain area. For example, a housing subdivision may use very similar building architecture throughout the development. All the ...

Principle stating that the joint tenants must have equal rights to possession of the whole property. ...

Landlord's right to receive the value of the tenant's property to pay for unpaid rents or for damages to the leased premises. ...

The definition for the gross living area published by the Appraisal Institute’s Dictionary of Real Estate 4th Edition is: “The total area of finished, above-grade residential ...

Characteristic of a trust that prevents the invasion of its principal by the trustees while providing a lifetime income to its principal beneficiary with the rest going to the son's ...

Under a FHA-insured mortgage, both the property and the borrower must meet certain minimum standards. The borrower is charged an insurance fee of one-half percent on the unpaid balance and ...

Popular Real Estate Questions