Why does ROI % seem to go down after a certain number of years?

[Brian Paine]

I don't quite understand this so called "law of diminishing returns". It shows up in the BP calculator each time I analyze a property. The ROI percentage starts to go down at about the 10 year mark. Plus I keep hearing that investors tend to sell after 5 to 7 years because of this.

I would think that the pay down on principal and increase in appreciation would create a compounding return.

What am I not seeing?