What is the term for the gradual decrease in property value over time due to wear and tear?

The correct term for the gradual decrease in property value over time due to wear and tear is depreciation. This concept is essential in real estate because it acknowledges that physical deterioration, whether from age or lack of maintenance, can negatively impact a property's market value.

Understanding depreciation is crucial for real estate professionals, as it affects investment decisions, property assessments, and tax implications. For example, during property evaluations, appraisers will account for depreciation to provide a more accurate value of the property in its current condition.

Appreciation, on the other hand, refers to the increase in property value over time, often due to external factors like market demand or improvements made to the property. Amortization relates to the gradual repayment of a loan over time via scheduled payments and does not directly pertain to property value changes. Obsolescence refers to a decrease in value due to factors like changes in market preferences or technology but does not specifically address wear and tear as depreciation does. Thus, the concept of depreciation directly aligns with the gradual reduction in a property's value caused by physical deterioration.