What is Appreciation?

Appreciation is the gain in value of a property that is realized when the property is sold.

There are a lot of factors that may contribute to a property appreciating in value. Zoning, the local economy, local property values and sales, improvements (or neglect) of the surrounding area all affect appreciation.

Keep in mind however that one of the major contributors to property appreciation is actually the decline in value of the local currency. That's one of the reasons that real estate and precious metals are hedges against inflation--they appreciate in value as the value of the currency goes down.