Suburban Inside Urban City Limits – Really?

Dave Towne

Dave Towne

Certified Residential RE Appraiser at Towne Appraisals
AGA, MNAA, Accredited Green Appraiser - Licensed in WA State since 2003.
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Dave Towne

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Suburban Inside Urban City Limits

Pre-filled template with ‘Suburban’ already checked…


Another appraisal report was delivered by a homing pigeon to my windowsill the other day. After leaving a ‘deposit’ on the sill that kind of matches the goop I observed in the report, off it went.

The subject property is within a built-up neighborhood area within the largest city in this particular area; it is within city limits. The neighborhood was developed in the 1950’s and 60’s. It is fully built out (i.e., all subdivided lots are developed) and has a couple of neighborhood parks. Population density is similar to other areas within the city. The ‘downtown’ area is a short drive from the neighborhood, and other shopping districts are closer. The city is a fully functioning modern area, with all typical urban amenities, schools, public services, etc.

On page 1 of the GSE report forms, we are asked to indicate the Neighborhood Characteristics, by using the checkboxes, and then below those we write comments about the Neighborhood.

The first line is for Location (of the Neighborhood, not where it is located in the region, state, nation or world)… as [ ] Urban [ ] Suburban [ ] Rural

The appraiser in this report has [X] Suburban checked. Why? I just described above the neighborhood characteristics as being Urban, within a city. The appraiser did also, as you will see below.

The Dictionary of Real Estate Appraisal, 4th Ed, defines ‘Urban’ as:

“…a mature neighborhood with a concentration of population typically found within city limits or a neighborhood commonly identified with a city.”

‘Suburban’ is defined as:

“…a neighborhood that contains complimentary properties with less concentrated population than is typically found in an urban neighborhood.”

In the FNMA Selling Guide, this information is provided:

“Fannie Mae requires the appraiser to perform an objective neighborhood analysis by identifying neighborhood boundaries, neighborhood characteristics, and the factors that affect the value and marketability of properties in the neighborhood.”

When an appraiser incorrectly checks a Characteristic box, this makes the report immediately questionable, less reliable, and certainly not objective analysis in terms of the appraiser’s responsibility.

Continuing down the report, we come to the Neighborhood Description, where we can include general or specific comments.

In this report, the appraiser wrote “This is a typical residential neighborhood within the city limits of XYZ.” Additional comments describe the lot sizes, types of additional residential housing, and commercial uses.

The appraiser correctly described the URBAN neighborhood. Why, then, was the ‘Suburban’ box checked on the form?

I can’t answer ‘Why.’

I can speculate that perhaps the appraiser does not understand the use of this part of the form, perhaps believes that it relates to ‘someplace farther away from’ or relative to ‘someplace else’ like a bigger city in the region, or a possible culprit… the report was started using a pre-filled Template with ‘Suburban’ already checked, and no proof-reading was done to verify this detail. Maybe the form was typed by a 3rd party, and not reviewed by the appraiser for accuracy? I don’t know which of these speculations is the actual one.

It’s real easy to blow through the checkboxes on the GSE forms. But they have real, and important, meanings in terms of loan underwriting. They may also affect the number of ‘correction notices’ an appraiser receives if errors are found, or box checks are questioned. These are a definite irritation to everyone involved.

Let’s be careful out there!

The embedded PDF below is my gift to you this holiday season. It will help you understand Locational Characteristics.

Image credit flickr - Mohamed Nanabhay
Dave Towne

Dave Towne

AGA, MNAA, Accredited Green Appraiser - Licensed in WA State since 2003. Dave Towne on

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20 Responses

  1. Kim DeFilippis says:

    URAR forms are misleading and they do not conform to USPAP requirements. Period.  Neighborhoods are geographic.  In a city with a population of 35,000, but a metro area of 60,000, even if the subject is located within the city limits, it can still be suburban.  In some markets, urban can have a negative connotation, without detailed descriptive language included in the report the reader is left in the dark.  If the underwriter is in Chicago, yet the property is in Hot Springs, AR urban could be interpreted as an over-populated neighborhood of subsidized housing. Sorry, but I disagree with your opinion. 


  2. Koma says:

    We have a subdivision that was outside the city limits and defined as suburban. Well the city just annexed that subdivision, so now that it is in the city limits should it be defined Urban? I don’t think so. 


  3. John Pratt says:

     The writer of this story has used some profound statements such as “these are a definite irritation to everyone involved”. It amazes me that he speaks for everyone. The writer of this article and some others may like to nitpick for minor errors or inconsistences in another appraiser’s works to show their superiority and knowledge however he doesn’t speak for everyone involved. Personally I get no satisfaction out of criticizing another appraiser’s work and therefore I do not accept appraisal review assignments. I do get the opportunity to view other appraisers work on a regular bases and receive requests for guidance and my opinion from other appraisers in this area because of the appraisal meetings I conduct on a regular bases. I try not to criticize but to provide suggestions and or alternatives for them to consider. All appraisers must keep in mind that they are the one that signs the appraisal report and they must be able to support what is or is not in the report. It is not a good answer for an appraiser to state that another appraiser, AMC or lender suggested or required something that is in their report. The writer also said “words have meanings”, and he is correct however “words have different meaning to different people”. I have lived in the Southeast, Midwest and the West Coast (California) and I can promise you that the same words can have different meaning in each of these areas and likely the same goes for the Northeast.  The appraiser that lives and works in the subject’s immediate area is the best one to evaluate and describe the subject neighborhood and I would suggest that it should reflect the perception of the people in the community. 


  4. Dave says:

    Funny! I have been asked why I checked appraisal as urban when the subject photos appear to be suburban, ie looks like vacant land in the area and not built-up with residential. I said the subject is located inside the corp. limits of a city of 30,000 people and is located in a commercial zoned area that appears somewhat suburban, however is considered urban due to being located inside the city limits , not well and septic. The AMC demanded I change this to suburban or rural due to the street photos looking like t was a rural type area. I noted in the reprt that this was a property on the out-skirts of town, located inside corp and noted as urban. They just wouldn’t leave it alone. I said just reassign to a rubber-stamper and shove the fee.  Do honest appraiser’s really need this crap. Does it really matter???? This shit is not longer fun…..


  5. Dave – not at all uncommon, nor in my opinion is it automatically incorrect. In fact, an argument can be made that it should be described as suburban in the box and text explanations giving further detail.

    The problem is that both urban and suburban are not definitively described in ANY of our “official” real estate texts or accepted dictionaries.

    The ‘why’ part of how this happens is easy. Many centuries ago (pre January 2015 anyway) FNMA approved lenders would exert great pressure on any appraiser that used the term urban at all.

    It was a stigmatized description in their minds (I won’t even go into the subliminal context of ongoing racism and ECOA violations associated with it – Redlining).

    Due to this extreme lender or correspondent lender pressure and absence of definitions to the contrary, appraisers collectively tended to use suburban over urban, or even rural – though for different reasons.

    Years ago when I was studying to take a California Coastal Commission Exam for Plan Analyst I, a local City Planner loaned me his text books. Between those, and such texts as were available at the time from AI and others (Anthony/Kaplan Schools), a consensus appeared to exist that once a population of 25,000 was reached the area was urban.

    That was circa 1991. I’m not suggesting that is or should be the case today – or even back then. Merely another ambiguity among the “definitions”.

    By that 25K population definition, the Guymon Oklahoma (Panhandle area) where a bank is asking for a PIW, would be urban!

    OK. Lets agree its probably more than that in most people’s minds… unless those 25,000 were all crowded into 25 acre section of town. How about a 500 acre section of town? What IS the density distinction between urban and suburban?

    Chevy Chase, Atlantic City, Long Island, Hilton Head, Myrtle Beach, Enid (Oklahoma) – urban or suburban?

    MANY parts of the City of Los Angeles are considered suburban by all who live there; Beverlywood, Bel Aire, Encino, Woodland Hills, Tarzana, Hollywood Hills, Westchester and so forth. There are many dozens more – if not hundreds. Oddly, in the 1920’s and 1940’s these same areas WERE suburban (or even rural).

    None are within walking distance of the Downtown CBD though many have developed their own business districts over the years.

    I just completed a report for a Fairfax District of Los Angeles property (non lending purposes). I described it in text as a “suburban character submarket with the greater urbanized Metropolitan Los Angles Basin area as indicated and defined on the attached neighborhood-competitive market area map addendum”.

    Im sure the sub area I defined had less than 25,000 residents. Very few commercial outlets except on peripheral traffic streets. City showed zoning as low density residential. You tell me… urban or suburban?

    Does it truly matter which box is checked for an ambiguous description when I clearly explained the neighborhood and competitive market area in text?

    This would probably be a good project for TAF over the next two years. Instead of needlessly rewording USPAP every two years – make yourselves useful! Define ‘urban’ unambiguously.


  6. Koma says:

    Mike, Thanks for sharing. I try to soak up as much as I can when possible. In two of my areas in one of my states it’s state law when a town population hits a mere 5,001 it has to be designated a city and then the zoning transfers from no zoning to legal. 


    • Also interesting. Id probably question a City of 5,000 being urban if it has any land at all. My suspicion is suburban vs urban would be a density per acre issue on top of all the other city services issues. A city is nothing more than a legal administrative entity. A tiny land area city could well be urban in character while a huge land area city might actually be suburban to rural.

      Im curious if anyones state actually defines the terms?


  7. Bill Johnson says:

    When up to 80% of all residential assignments go through AMCs, many appraisers succumb to the relenting 20 page engagement letters defining what the meaning is of numerous things, versus the correct and more difficult road where the appraiser in essence becomes the teacher (no teacher benefits). Included in this, is the fact that many an AMC have pre-determined the acceptable distance a comp can be from the subject based on the checked location box within the Neighborhood section of the report. Typically, urban means all comps need to be within a 1/2 mile, suburban is within a mile, and rural means within 5 miles. One should follow the facts and report the truth, however the truth often runs counter to the AMC machine. Perhaps this appraiser has stopped seeking the truth, and regardless of facts, marks everything as suburban.Seek the truth.      


  8. David P says:

    Dave, Your perspective brings up a scenario. In a surrounding county to the City, there are cookie cutter subdivisions and strip malls galore; definitely a suburban area. Recently, mixed used developments have been built. These developments have retail stores, parking garages, restaurants, offices, banks, dry cleaners, fitness centers, grocery stores, etc. The atmosphere is that of a downtown street of yester year. There are businesses on the first floor with apartments and condos above and sections of townhomes. The townhomes have no yards, only roof top decks. One development even has a museum. Those who live in these communities do not drive, they walk. These developments are very urban in design, function and appearance. This is becoming a trend in many parts of the country. What would you classify these developments? Urban or Suburban?


    • An artificially hyped trend imho. Niche market. Great for developers – not so much for residential owners.

      Graffiti was a trend for awhile – though not a good one. Hi rise condos are still a ‘trend’ in California – not the best idea in an earthquake prone area (imho). Even with modern building standards there is a (significant) perception of gambling with one’s life in some market segments.

      Nuclear power was a trend in San Onofre for years… until the shut down costs and the true cost of long term nuke energy became apparent to rate payers.

      I know I side tracked. Apologies. It was the use of the term trend as if it is assumed being a trend is a good thing.

      A rose by any other name… is still a rose; just as a POS trend will remain a POS whether its called urban or suburban. Beware of trends promoted by builders rather than prospective buyers.


      • David P says:

        Not a negative Mike. These developments are in high demand by empty nesters and young families. Very few go on the market and when they do, only for a day or two with escalation clauses. I agree this environment is not for everyone, but there is a strong market for them.


        • Id quibble about high demand. Depending on where you live or in which major urban community they are located, there is some degree of interest.

          Some may meet the affordable housing element requirements of a City General Plan (though not all). I’ve seen too many in the Los Angles market to agree with how fast they sell or that they are an overall desirable way to go when there are alternatives.

          In small communities they are often touted as a socially conscious movement when what they really are is nothing more than a way around zoning and development standard limitations (hence the desire to include so called ‘affordable’ units in such projects). I sat in too many City Council and Planning meetings (literally hundreds of hours) to be a universal convert of these.

          SOME may be widely desired. Most I have studied or observed are not. I’d be more receptive of these in relatively smaller towns or communities where public transportation may be limited and there is a need or wish to live nearer the CBD than in surrounding outskirts. I’m (personally) not fond of any that go high rise – though I set aside my personal views when appraising any.

          Dual owner associations (or even triple associations where dedicated rentals are also present) makes management a potential nightmare and puts huge risks on the residential owners if commercial businesses start to fail in the building.

          (1) They do appear to have their place – I think its limited

          (2) By themselves they are not indicative of urban or suburban characters; my perception is they tend to arise in older urban areas (via redevelopment) – but they are also tried in smaller communities attempting to pander to ‘pseudo green’ interests or increase so called walk scores.


  9. Dave says:

    I guess it’s all comes down as to your own perspective. I work in a very rural county with the county seat having a population of around 30,000 people surrounded by farm land and a few small villages of 1-2 thousand. I generally note urban inside of corp. limits and rural on properties outside of corp. limits and seldom note suburban based on my market. Large metro area’s which have “suburbs” could be checked as suburban I guess. There are many suburban bedroom communities much larger than my county seat which probably would be considered suburban.



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Suburban Inside Urban City Limits – Really?

by Dave Towne time to read: 2 min