What does "accrued depreciation" measure in an appraisal?

Accrued depreciation is a crucial concept in real estate appraisal, representing the total loss in property value stemming from all possible causes up to the present time. This encompasses both physical deterioration — wear and tear due to age and use — and functional or external obsolescence, such as changes in market conditions or neighborhood desirability. Measurement of accrued depreciation is essential as it aids appraisers in accurately determining the current market value of a property by considering how much value has been lost compared to its cost or potential market value when new. Thus, recognizing accrued depreciation is vital for producing reliable property appraisals, ensuring that all factors influencing a property's value are adequately accounted for.