Appreciation refers to the increase in the value of a property over time. Appreciation can be caused by a number of things including inflation, the increase in demand or a decrease in supply of properties. Appreciation can also take into account added value as a result of improvements done to the real estate (i.e. upgrading a kitchen, adding a room or a pool, etc.). Appreciation is usually projected as a percentage of a given property’s value over the course of a year.