What does "unearned increment" refer to in real estate?

"Unearned increment" refers to the increase in property value that occurs due to external factors, particularly location-based influences. This concept is significant in real estate as it highlights how properties can gain value not necessarily from the actions of the owner or improvements made to the property but rather due to the surrounding area's development, enhancements in infrastructure, changes in the local economy, or other external influences. Such increments are often seen when a neighborhood undergoes revitalization or when new amenities like schools, parks, or shopping centers are introduced nearby, drawing more interest and demand for housing in that area.

Understanding this concept is vital for real estate professionals, as it can influence investment decisions and appraisal values. The other options discuss elements that focus on owner-imposed value changes or depreciation, which do not align with the definition of "unearned increment."