Definition of Depreciation:
Depreciation Real Estate: Orange County, California:
Just as the name implies, this is a decline in the value of property; the opposite of appreciation. Depreciation is also an accounting term which shows the declining monetary value of an asset and is used as an expense to reduce taxable income. Since this is not a true expense where money is actually paid, lenders will add back depreciation expense for self-employed borrowers and count it as income.
What are some conditions that will lead to a declining property value in Orange County, California? Market conditions such as a home's wear and tear over time, and changes in the localized neighborhood and community will all affect the value of a home. Home prices will depreciate depending on the fair market value of the home: the simplest definition being the price at which the buyer is willing to pay and the seller is willing to accept. When the real estate market is in a recession, home prices will depreciate since homebuyers are reluctant to enter the market, causing prices to decrease as the supply of homes will be greater than the demand. The Orange County real estate market is hyper-sensitive to supply and demand functions.