Added value to real estate or other assets that is the result of increasing prices. Most buyers of real estate expect their property to appreciate – that is, they expect that over time, their home will become worth more.
Home price appreciation is largely the result of supply and demand, plus the normal effects of inflation. If a town receives a significant influx of new residents looking for homes, the prices of houses will likely increase. If a large employer shuts down and many people leave, the prices of nearby homes will probably fall.
Appreciation in individual property markets is highly variable, but overall annual appreciation in the US has largely remained in the three-to-five percent range over time.