Is a "Neighborhood Market" a credible term?

[ZZGAMAZZ]

I'm adding the following 12/24 FNMAE definitions of Neighborhood and Market into my 1004 template: [As an aside, FNMAE clarified for me that "complentary land uses" can include any type of improvement, e.g., industrial that IMO aren't complementary.]

Nevertheless my question: I often favor the term "Neighborhood Market" when I'm describing criteria for my market research, including "competing" properties; but I don't know whether the term "Neighborhood Market" even exists, and if so is it meaningful, and credible, or misleading? Seeking peer perspective please.

 

[Terrel L. Shields]

A commercial neighborhood would be an "Industrial park" - urban shopping mall - farmland area
A market area might be the entire town where the small downtown, highway retail, surround urban and suburban housing is harmonious within a community. Or it might be a large area of rural villages and mixed small and large homes along with some economic farms.

 

[ZZGAMAZZ]

A commercial neighborhood would be an "Industrial park" - urban shopping mall - farmland area
A market area might be the entire town where the small downtown, highway retail, surround urban and suburban housing is harmonious within a community. Or it might be a large area of rural villages and mixed small and large homes along with some economic farms.

I emailed FNMAE about "complmentary land uses." I figured that retail commercial, etc., would complement residential properties, although heavy industrial improvements wouldn't. Like always, they responded almost immediately, implying--without commenting specifically--that no distinctdion would exist between light retail and heavy industrial when seeking to determine or define complementary improvements.

 

[jay trotta]

I emailed FNMAE about "complmentary land uses." I figured that retail commercial, etc., would complement residential properties, although heavy industrial improvements wouldn't. Like always, they responded almost immediately, implying--without commenting specifically--that no distinctdion would exist between light retail and heavy industrial when seeking to determine or define complementary improvements.

They are complimentary, within T's description, aren't they?

 

[Fernando]

I thought this was a Fernando Thead.

 

[Surf Cat]

Nevertheless my question: I often favor the term "Neighborhood Market" when I'm describing criteria for my market research, including "competing" properties; but I don't know whether the term "Neighborhood Market" even exists, and if so is it meaningful, and credible, or misleading? Seeking peer perspective please.

You're conflating the two terms. Thus, being misleading. Use "within the immediate neighborhood", or "Market area" in your descriptions. Don't use "Neighborhood Market"....it makes it sound like you don't know what you're doing...

• Market Area vs. Neighborhood: While a neighborhood is a group of complementary land uses and focuses on social, economic, governmental, and environmental factors, a market area is broader and includes competing properties. A market area may be larger than a neighborhood and can extend beyond the immediate vicinity of the subject property.

 

[sputnam]

All terms require definitions. If a term that isn't commonly understood... or if use it in a way that isn't common... then, it's important to provide the definition thats' intended. There is no prohibition (that I'm aware of) to using the term 'neighborhood market'. To avoid being misunderstood or misleading, simply include the definition in the report... in exactly the same way that you include the applicable definition of value.

 

[Joe Flacco]

A commercial neighborhood would be an "Industrial park" - urban shopping mall - farmland area
A market area might be the entire town where the small downtown, highway retail, surround urban and suburban housing is harmonious within a community. Or it might be a large area of rural villages and mixed small and large homes along with some economic farms.

There is no such thing as commercial neighborhood. Neighborhood includes commercial and the residential that it primarily draws from.

 

[alebrewer]

Agreed with Surf. Neighborhood market sounds kind of like a corner convenience store, ZZ. I'd use 'neighborhood' when describing the geographic makeup of the subject's immediate area (transportation routes, land use makeup, support facilities, etc. I'd use market area when describing the area that potential buyers of the subject property would look for feasible alternatives.

 

[NC Appraising]

Below are the two best sources on the subject.

Since I was not behind the formation of the 1004, I can only speculate.

I believe neighborhood was really ment to mean subdivision for the most part for the 1004. If you read gse and FHA guidelines, they wanted the appraiser to put in the subdivision name as the neighborhood. Also, they used terminology such as arctectual....

It makes sense to use the subdivision as the neighborhood ....it's easier to catch appraisers when they outside of the subdivision to use superior sales.
1. Predominant prices
2. Easier to decern a over improvement or a under improvement.
3. One mile radius guideline came from? How many neighborhoods are actually 1 mile? Few. Most subdivisions are tho.

The issue has always been the difference between what the gses/FHA wanted and what the appraisal text said a neighborhood was.

Also, what about rural markets? Really are no subdivisions in rural markets....good example of trying to put everything in the same box..form.

That is why many of the older appraisers would put in 100% built out and all data would be from the subdivision. *technically they were right if using the 1004 form. But was not right per the appraisal text books.

Differences Between Neighborhood & Market Areas & Analysis

Appraisers make a distinction between the neighborhood in which a residence is located and the market area in which comparable properties will be found.

appraisersblogs.com

https://www.datamasterusa.com/wp-content/uploads/2020/03/Black-Knight-1004MC-white-paper-1.pdf

https://appraisalfoundation.org/imis/docs/Valuation_Advisory_4_Identifying_Comparable_Properties_Upated_Final_09262013.pdf