Thou shall know thy neighorhood boundaries

It’s so important to know exactly where one neighborhood ends and another begins. Misunderstanding neighborhood boundaries can have a dramatic impact on perceived property value. When dealing with a short sale situation, loan modification, property tax reduction, bankruptcy, or really any transaction, it could really backfire if the decision makers for your loan or legal documents do not take into account important market boundaries.

Let’s look at the map below as an example. The area traced in red is a portion of the Central Oak Park neighborhood in Sacramento, while the area traced in blue is known as Tahoe Park West.

Both of these areas are really separate neighborhoods despite being right next to each other (divided by Stockton Blvd). There is actually a huge difference in property value between these two areas as indicated on the trend graph below. The median price level throughout most of the past year in Tahoe Park West hovered around $150,000, while the median price level for Central Oak Park was closer to $60,000.

It’s easy to imagine how online valuation websites (like Zillow or Cyberhomes) or even inexperienced real estate professionals might make sincerely wrong value judgments by looking at all sales within a 1/4 mile radius or some other parameter that does not encapsulate the true neighborhood. That’s why it’s so important to work with professionals who really understand the local market.

How might misunderstanding neighborhood boundaries really do some damage?

If you have any real estate appraisal, consulting, or property tax appeal needs in the Greater Sacramento Region, contact me at 916.595.3735, by email, on our appraiser website or via Facebook.

Comments

  1. says

    Great Points Made, Ryan! Thank you for the reminder on this. There on major boulevard in Baton Rouge where the difference in home values north and south of blvd can be $50,000 to $400,000. Relying on Zillow would be a critical mistake in such a situation. Appreciate You! Bill

    • says

      Thanks, Bill. It’s amazing how boundaries in a neighborhood can make a huge difference. Sometimes boundaries are not as easy to distinguish too – especially for valuation websites that don’t really know the local market.

  2. says

    It is insights like this that lead me to hire Ryan Lundquist. We live in Fair Oaks, which is beautiful. However, we are not near the river (compared to some) and our home is much older than most in Fair Oaks. Differentiating between homes newer and old, volatile, and areas less desirable can be a difficult task.

    Good appraising certainly takes more than picking a side of the railroad tracks.

  3. says

    And another important factor in that area is proximity to the Med Center. Oak Park kind of “blends” into homes that are closer to the Med Center and the difference in neighborhood feel and home values is distinct.

    • says

      Really good point, Bill. Med Center is a great example of this phenomenon because properties north of Y Street are typically known as “Med Center”. So we shouldn’t see appraisals for properties south of Broadway picking comps so far north. It’s just a different market. It’s kind of a tricky market too. I did a Med Center appraisal a few weeks ago.

  4. says

    There is a no mans land between Broadway and Stockton Blvd that blends from true Oak Park to areas of gentrification just west of the Med Center. I did one in just such an area not long ago and I had to go block by block to get the right comps.

    • says

      I think “no man’s land” is a good description because you’re right that north of Broadway tends to be more gentrified. Going block by block is definitely a good way to go. There are some really stellar houses in Oak Park too – some beautiful victorians.

  5. says

    Great little article, thanks. FYI: found it as a tweet. Anyway, got any quick tips on how to determine the different neighborhoods, other than knowing the area first hand? How to make an MLS search easier in order to decipher the information? Thanks this will really help me out as I am a new agent in Spokane, WA looking for advice all the time.

    • says

      Hey Ryan, thanks for checking in. Are we connected yet on Twitter? I hope so. I’d love to follow you.

      Quick tips? Start your search parameter as small as possible at first and slowly go out to see if there are any changes. If you don’t know an area, this will help you at first to maybe get a basic grasp of what is going on. So maybe start by searching a few streets, then a 1/4 mile, then 1/2 mile, etc… If your MLS does let you draw exact boundaries on a neighborhood, try to keep things smaller and put your boundary around main streets at first so you know for sure you are not crossing into another market (main streets often divide market areas – not always though). I’d say to really look at important boundaries that often mean something – such as a freeway, busy street, railroad tracks, lake, commercial district, school, park, a street or boundary where property types clearly change (maybe a difference in age or design), etc… Zillow actually can come in handy here too because in some neighborhoods there are already defined boundaries listed on their website when you do an address search. Granted, the boundaries are not always perfect and sometimes not what I consider to be a neighborhood, but it may be worth a look at least (this is what it’s like in Sacramento for Zillow anyway). Lastly, this all comes over time. Talking with other agents and doing business in certain neighborhoods – that’s the best way we really get to know a market.

      Best wishes to you.

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