Neighborhoods defined by ZIP Codes

[EveInColorado]

Wonder if you have heard anything about this? Perhaps you know where I could look to learn if there is a rule or reg about it? Per Rocky Mountain News (5/17/08): FNMA is replacing a December policy that based maximum loans on the ZIP code in which the property is located. NAR's pres Richard Gaylord objected (April) because "the health of the housing market in a particular ZIP code can differ widely, neighborhoods with strong housing markets are often stigmatized." I believe that I lost at least one company over their use of ZIPs, as the ZIP area as a whole is declining and yet this lovely, higher-priced subdivision of newer homes (in the ZIP) is increasing. (Basically, they said I was a lying, cheating fool.) The article goes on to say: "Rather than defining those markets by ZIP code, Freddie Mac allows appraiser to make that determination," said a Freddie spokesman (unnamed.)
Great!! The USPS determined the "neighborhoods" for appraisals years ago when they outlined the areas that would make it easiest for them to sort and deliver mail!!! On the URAR, why did FNMA put a "Neighborhood" section when they really wanted a ZIP Code analysis????
Minor problem? Every day I spend hours explaining/ writing to Underwriters about the differences between ZIPs and subdivisions, etc. Realtors in my area are VERY aware of this problem. Contracts fail because the price is not supported by the ZIP. (Is the Beverly Hills show with the ZIP code more influential that all our appraiser education classes?)
But I have not heard much appraiser chatter on it. What do you know about this? EveInColorado

 

[c w d]

I've never run into a problem, that I know of, defining the market area for the subject as I see it based on what I know of the area instead of purely on zip codes.

 

[Hamlet]

Funny, I saw a Zaio sample that used the entire Zip Code to define the market area. Hmmm....

 

[Edward OConor]

I would not work where I am. People purchase based on school district. We have districts with multiple Zip codes, therefore very different markets within Zip codes.

If you do spend hours each day explaining, WHY? Boilerplate a comment and attach it to any report that might be a problem.

 

[TEL2002]

I used to teach in a school district that covered the entire township, and had at least 5 zip codes. Each zip has a huge range of property prices, sizes, age, etc.

I determine declining or not declining based upon the immediate neighborhood. I refer to it as a zip code submarket. I outline the immediate neighborhood on the map with a red line, this way there is no confusion as to the neighborhood boundaries.

 

[Carnivore]

The most obvious and Make-Sense way is to use Census Tracts!


Geeez, sometimes I wonder about the big shots at these lending insitutions.