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?