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The Typical Buyer & Typical Neighborhood

Terrel L. Shields

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May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
It is usually very neighborhood specific.
If it is a neighborhood and property type
The typical buyer
for most neighborhoods that would be pretty common.
all of the properties in this neighborhood
a different neighborhood with different location factors
right now in my neighborhood is
what is typical in the neighborhood
The norm typically being what one would expect for the neighborhood

Curious about your "neighborhoods" and how posters are applying the term. Above are snippets of comments made by appraisers and so I am asking just how uniform are your "neighborhood", how are you defining the "typical neighborhood" and the "typical buyer". And why would the typical buyer not reflect a fairly eclectic mix of humanity with various desires, needs, and budgets.

When I see "neighborhood" bandied about as if it were some monolithic gated community where gentiles are not allowed, homes are built only within a narrow range of sizes and configurations dictated by some housing god. Yet left unsaid is the actual boundaries and composition of this mythical creature. I muse over the possibility of that term being distorted to fit the mind of the appraiser rather than any real attribute of the property. So how do you determine your "neighborhood" and is it a square or rectangular monolith? A squirming octopi of tentacles stretching out from some central area? What defines a "neighborhood" in your mind?

I work a rapidly growing area. There are more houses 20-25 years old or less than there are houses 20-25 years old or more. In the 60s, I would venture the average new construction was 1,000 SF, maybe somewhat less. By the 70s perhaps 1,400 SF with 3 bed, 2 bath. And in the first years of my career, say 1992 as the starting point, most new construction was still less than 2,200 SF with the first of large palatial homes coming with the wealth created primarily by Walmart and the executives there as well as their vendors, not that such never existed earlier, but was relatively rare.

So over time, I have seen the change in house sizes and styles follow the fashion more than reflect any archetypal 2.8 person family. So, dropping from the towns I know (which grew from 5 -10,000 population in 1960 to 50,000 plus each - Bentonville, Rogers, Springdale, and Fayetteville) to the smaller towns of say 3,000 to 15,000 at most. Why would I not say, for instance, that Gravette, pop. 3,200~ is not one "neighborhood"? And within that neighborhood there is no "typical" buyer. There are downtown commercial owner operated properties. There are a few franchise businesses. Government buildings, churches. There are apartments, duplex and four plex properties, and older homes, newer homes, starter homes, and some slightly higher grade homes. Sprinkled among all are the usual mix of eclectic one of a kind homes of doctors, or people who are wealthy.

In that pool of buyers and sellers, why do we seem fixated that some feature or another is not "typical"? Two bedroom? Three bedroom? Old or new? Budget constraint is a major factor in choices made in housing. But to say one is "typical" because there are more 3 bedroom homes than two, seems a bit questionable. And, since much of the older parts of town see the widest variety of sizes and styles, buyers, etc.

So I am curious how you determine the "neighborhood" when pigeon holing these mythical creatures called the "typical" buyer? In my mind these smaller towns are a single neighborhood with a mix of commercial, retail, governmental and living space that attracts people of all stripes from the larger family to the empty nester to the young or old single. Ever notice that? Elderly widows and young people end up in small apartments as the most convenient living space? Do you have a lot of "neighborhoods" that are so uniform that they all attract the very same kind of people? I mean I drive into Tulsa and even on the back streets there, the area can change radically in a quarter mile. I'd be hard pressed to define a neighborhood as a single subdivision or find one with sufficient sales to consider a unique market. That's just my opinion.
 

J Grant

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Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Though it can comprise a neighborhood for appraisal it's identifying competitive market area of properties that are substitutes for your subject and appeal to the "typical" buyer for those properties.

The buyer for an urban condo differs from the buyer for a 5 acre hobby farm / differs from the buyer for a suburban tract house, yet each buyer is "typical " within a specific appraisal.

The needs and wants of a two million dollar buyer looking in a gated luxury community differs from wants and needs of a two hundred k buyer looking for a family starter home - each is typical of a buyer pool for a subject and same goes for competitive market geo area/ neighborhood of properties they would consider.
 
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Tom D

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Certified Residential Appraiser
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Pennsylvania
i live in a very urban city with very defined neighborhoods. when i get a property in a corner of a neighborhood bordering other neighborhoods then i go with neighborhood name, but marketing area for boundaries. when i did the suburbs i would sometimes say the neighborhood boundaries, and also write the marketing area includes north of it. never asked to define how far north was. i am lucky, most of my comps are within 3 blocks of the subject. your discussion brought back memories when i saw a rustic suburban area.
 

Terrel L. Shields

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Arkansas
The buyer for an urban condo differs from the buyer for a 5 acre hobby farm / differs from the buyer for a suburban tract house, yet each buyer is "typical " within a specific appraisal.
That suggests the "neighborhood" isn't a region of complementary uses, rather is a market of similar properties that rather than being a monolith is that spreading tentacles sprinkled in amongst other properties. There is no real block of hobby farms, rather they fill in the less developed areas in a community. Likewise, those suburban areas can be disaggregated by the age, style and quality of the housing. But these are market segments. Are we calling those "neighborhoods" when a better descriptor might apply? A true neighborhood should have a mix of residential, governmental and retail uses, something like a small town, or the definition of neighborhood becomes one that defines a market segment.
a very urban city with very defined neighborhoods
Do those neighborhoods contain a mix of complimentary uses? The Pennsylvania I am familiar with seemed hardly very uniform but I was mostly in the smaller towns in the middle of the state. So those to me would be a mix of uses typical of a small town and I wouldn't want to try and dissect them into some sort of submarkets...speaking of which, I don't equate neighborhood with market segment.
 

Evincere

Elite Member
Joined
Dec 30, 2002
Professional Status
Certified Residential Appraiser
State
Florida
It is usually very neighborhood specific.
If it is a neighborhood and property type
The typical buyer
for most neighborhoods that would be pretty common.
all of the properties in this neighborhood
a different neighborhood with different location factors
right now in my neighborhood is
what is typical in the neighborhood
The norm typically being what one would expect for the neighborhood

Curious about your "neighborhoods" and how posters are applying the term. Above are snippets of comments made by appraisers and so I am asking just how uniform are your "neighborhood", how are you defining the "typical neighborhood" and the "typical buyer". And why would the typical buyer not reflect a fairly eclectic mix of humanity with various desires, needs, and budgets.

When I see "neighborhood" bandied about as if it were some monolithic gated community where gentiles are not allowed, homes are built only within a narrow range of sizes and configurations dictated by some housing god. Yet left unsaid is the actual boundaries and composition of this mythical creature. I muse over the possibility of that term being distorted to fit the mind of the appraiser rather than any real attribute of the property. So how do you determine your "neighborhood" and is it a square or rectangular monolith? A squirming octopi of tentacles stretching out from some central area? What defines a "neighborhood" in your mind?

I work a rapidly growing area. There are more houses 20-25 years old or less than there are houses 20-25 years old or more. In the 60s, I would venture the average new construction was 1,000 SF, maybe somewhat less. By the 70s perhaps 1,400 SF with 3 bed, 2 bath. And in the first years of my career, say 1992 as the starting point, most new construction was still less than 2,200 SF with the first of large palatial homes coming with the wealth created primarily by Walmart and the executives there as well as their vendors, not that such never existed earlier, but was relatively rare.

So over time, I have seen the change in house sizes and styles follow the fashion more than reflect any archetypal 2.8 person family. So, dropping from the towns I know (which grew from 5 -10,000 population in 1960 to 50,000 plus each - Bentonville, Rogers, Springdale, and Fayetteville) to the smaller towns of say 3,000 to 15,000 at most. Why would I not say, for instance, that Gravette, pop. 3,200~ is not one "neighborhood"? And within that neighborhood there is no "typical" buyer. There are downtown commercial owner operated properties. There are a few franchise businesses. Government buildings, churches. There are apartments, duplex and four plex properties, and older homes, newer homes, starter homes, and some slightly higher grade homes. Sprinkled among all are the usual mix of eclectic one of a kind homes of doctors, or people who are wealthy.

In that pool of buyers and sellers, why do we seem fixated that some feature or another is not "typical"? Two bedroom? Three bedroom? Old or new? Budget constraint is a major factor in choices made in housing. But to say one is "typical" because there are more 3 bedroom homes than two, seems a bit questionable. And, since much of the older parts of town see the widest variety of sizes and styles, buyers, etc.

So I am curious how you determine the "neighborhood" when pigeon holing these mythical creatures called the "typical" buyer? In my mind these smaller towns are a single neighborhood with a mix of commercial, retail, governmental and living space that attracts people of all stripes from the larger family to the empty nester to the young or old single. Ever notice that? Elderly widows and young people end up in small apartments as the most convenient living space? Do you have a lot of "neighborhoods" that are so uniform that they all attract the very same kind of people? I mean I drive into Tulsa and even on the back streets there, the area can change radically in a quarter mile. I'd be hard pressed to define a neighborhood as a single subdivision or find one with sufficient sales to consider a unique market. That's just my opinion.
Do you have a lot of "neighborhoods" that are so uniform that they all attract the very same kind of people?
Yes. In my
(snoot suit) neighborhood people will put a perfectly working 50” Visio TV out in the trash heap along side the empty box of the new 75 inch TV they just bought.
Whereas another neighborhood in the same zip code residents are probably just getting around to buying their first 50” TV.

Gated (esp guarded) usually equates to less crime, greater security surveillance, more amenities, higher taxes, higher property values, people (typical buyers) who shop Whole Foods vs Walmart.

hence neighborhood boundaries more often than not must be carefully defined
 
Last edited:

Carnivore

Elite Member
Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
Coincidental that you brought this up! I have an assignment where the Lender is requiring me to Report the Census Tract info for the Subject and they cited the 2010. Census. I am reading into this a little, but I think this would also require me to report the Census tract for the Comparable used.

Here is the exact wording along with the others in the list. This client is a Credit union. Conventional Loan 1004 w/1007

COMMENTARY REQUIREMENT

  1. You MUST include the following statement in each report, "Utilities were on at the time of inspection and in working order"
  2. For any blanket statements on mold you MUST include the following, “The mold and other environmental statement(s) are a blanket statement unless otherwise noted”
  3. You MUST comment that you used 2010 census tract info
  4. If you use comps that are more than 1 mile away and/or exceed 6 months you MUST comment specifically on their use
  5. If a percentage of present land use is marked as “other”, you must state what “other” refers to (i.e. vacant, etc.)
 

George Hatch

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Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
User-driven development and reporting requirements. Another example of the futility - and inefficiency - of one size fits all. After a certain point it's not productive to attempt to answer everyone's requirements in the same widget. That leads to you doing too much additional and uncompensated work for every assignment.

That's how asking 20 questions or downloading a written appraisal policy leads to faster assignments. That's how avoiding unwarranted assumptions about what a user needs saves THEM time and energy in reading your reports and makes the report more user-friendly to THEM.
 

Renee Healion

Elite Member
Gold Supporting Member
Joined
Feb 21, 2004
Professional Status
Certified Residential Appraiser
State
Connecticut
Census is for fair lending reporting for lender not comparing sales and listings. The most recent one is 2010.

Just another thing we do that is not value-related but that they might as well ask us. Then it is in their file on the subject. So don't go nuts looking at census for comps unless you have your own reason. :)
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
Census is for fair lending reporting for lender not comparing sales and listings. The most recent one is 2010.

Just another thing we do that is not value-related but that they might as well ask us. Then it is in their file on the subject. So don't go nuts looking at census for comps unless you have your own reason. :)
I think census tract boundaries can be useful for certain types of valuation analyses. Maybe not comp selection per se, although that's possible, too.
 
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