What is Depreciation?
The decrease in the value of a home over time. Market conditions, a home's wear and tear over time and changes in the neighborhood affect the value of a home. Home prices will depreciate depending on the fair market value of the home: the price at which the buyer is willing to pay and the seller is willing to accept. When the economy is in a recession, home prices will depreciate since people buy less, causing prices to decrease as the supply of homes will be greater than the demand.