A number of factors can lead to habitat degradation, the first being outright habitat destruction. If a habitat is being used for something other than its intended purpose and it is changed, it can be almost destroyed.
A habitat can be degraded in a number of ways, such as pesticide application and air pollutants. If all-terrain vehicles are driven everywhere, they can degrade habitats. So there are a number of factors that can contribute to habitat degradation and make habitats less useful.