What does "depreciation" signify in property appraisal?

Depreciation in property appraisal signifies the loss in value of a property over time due to various factors. This concept is pivotal for appraisers, as it assists in establishing a property's current worth in relation to past values. Depreciation can arise from physical wear and tear, functional obsolescence, or external economic changes affecting the property's desirability in the market. Understanding this concept allows appraisers to make informed decisions about a property's value that reflect its current condition and market influences.

The other options do not accurately define depreciation. The first option describes appreciation, which is the increase in value rather than a decrease. The third option pertains to market variability, which does not directly relate to the concept of depreciation. The last option focuses on renovations and improvements that add value, rather than the processes that lead to a decline in value over time, which is the essence of depreciation.