Suburban Inside Urban City Limits – Really?
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.
- Sale Price vs Appraised Value Disconnect - April 10, 2023
- Speed Regardless of Accuracy Under the Banner of Modernization - March 8, 2023
- Marin City Discrimination Case Settled - March 7, 2023
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.
Agree. Especially about URAR form being essentially garbage – though still far better than URAR in UAD format. Just for fun, toss in the phase ‘competitive market area’ instead of neighborhood (which may well be different).
Urban, suburban and rural are subjective terms. From the little neighborhood description you’ve given I could see that as being suburban. I live in a large metro and we have lots of very dense areas that are still considered suburban. Yes, there are technical definitions, but I go by what the market considers it.
I appraise in the Jacksonville, Florida metropolitan area. Jacksonville is a consolidated city which means that the entire county (Duval) is within the city limits. Jacksonville is the largest city in the United States based on land area. You could see a 300 acre farm within the city limits of Jacksonville. It is possible to have an urban neighborhood, a suburban neighborhood and a rural neighborhood all located within the city limits of Jacksonville. In my view, the local real estate appraisal experts are best equipped to define the neighborhood characteristics and boundaries without judgmental sarcasm from remote reviewers. I guess I could be wrong though…I’ve only been doing this for 34 years.
I follow strict dictionary definitions when checking the box area. Then explain further in the comments. We have large farms within city limits. I describe as within city limits in an area with a rural setting or something similar with areas having a suburban feel or an area that is second or third ring from the main metropolitan urban core.
Dictionary definitions are not subjective in and of themselves. I have not had one single instructor that said to use subjective descriptions in the check-box area of the report. Subjective is why you have comment areas.
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.
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.
Excellent comments! Concur.
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…..
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.
I have lived in the Fairfax district of the City of Los Angeles, and it is urban. I have appraised in Beverly Park, the last subdivision approved on the ridge top of the Santa Monica Mountains, meaning no more similar subdivisions will ever be approved. This neighborhood is above the Beverly Glen neighborhood, also exclusive, but which lacks panoramic views enjoyed by the residents of Beverly Park. While this last subdivision ever to be approved in LA has a Beverly Hills Post Office zip code, people try to consider it as they would for homes in Beverly Hills, so I go back to my urban planning degree and describe it as urban although it has no commercial property in the immediate vicinity because it also has nearby commercial (on the valley side and down the hill on the other side of the mountain where you can shop, work, get entertainment or send your kid to the most expensive private school, so I consider Beverly Park as URBAN. Just because it is not in the core of downtown LA doesn’t mean it isn’t an urban location.
When I went for my exit interview for my MAI in San Diego where a lot of people saw smog above my head because I was from LA and there was a campaign against the “LosAngelesization” of San Diego, and the local MAIs saw me, a woman expecting a baby getting my MAI after 10 years of post-graduate work and courses, and after having passed the comprehensive the first time, I had all the qualifications to be awarded the MAI, but the men on the committee for the exit interview had to “put me in my place” by asking a question about an appraisal of a large Hollywood apartment complex used for experience credit asked me: Why did you check the Urban Box on the form for Hollywood – Was Hollywood in Downtown LA? Well, I told him 20 reasons right of the top of my head that make it urban, eg. (24 hour restaurants, bus transportation to all points local and distant, high density development, high density population, a variety of food restaurants from all over the world, the fact that there were apartments that were adjacent to high rise commercial properties, high rise condominium development, redevelopment of older single-family to high density apartments, and a lack of recent land sales, the built up nature of the neighborhood, close to freeway, shopping, employment and 24 hour entertainment like few places on earth besides Times Square, etc). I thought I’d answered the question, but what was really going on in the interview was to feel me out to see if I should get into the club (AIREA back then), and why was this woman trying to be like them when they were all men???
Well, I did get my MAI, but they put me through such hell I was depressed until I found out I qualified. I went years working and doing large projects in the LA urban, suburban and rural areas all over CA, downtown San Francisco, and lots of special purpose properties, etc., but now I am not qualified to do a single family because I have to work for a pimp, and their reviewer (not a real review because they feed it into a machine to find out what’s different) demands I look at more comps that aren’t really comparable because it is his job to harass appraisers with scope creep. There is just no way someone who hasn’t studied appraisal or real estate properly is in any way qualified to determine if the location is urban, suburban or rural using FNMA’s guidelines; we all know they are made for the selling of loans on the secondary market, not for anything like reality! The GSE’s are all back east where our government thinks the west is still wild and we all go around in cowboy boots on horses and holsters with two guns while our rifle is strapped to our horse…. They live in identical vertical boxes without a yard, so they can’t relate to housing unless it is identical (at least on the outside), and if it was built in 1920 and has been remodeled, even though it is unreinforced, they don’t deal with earthquakes there, so there are regional differences they just don’t consider on their outdated forms.
I’ve done huge jobs, but now I just hate doing a house for an AMC because I do all this work, verify the sales, follow the UAD stupid rules and subject myself to being pimped out for less than half of what they get, and I never find out how much they made on me. I may be starving soon because most jobs actually cost me money to do because of all the expenses you need to spend to be prepared to do residential or commercial appraisals, like mls, forms, insurance, licensing (still in two states), continuing education, etc, not counting computer software, internet, phone, car expense and other things I use for my work are breaking me, sucking up any profit I could make on my own grit and verve because corporations (owned by banks mostly) have taken over the lending appraisal market by inventing the AMC model where a 19 year old is judging your work, arguing with you that you checked the wrong box on page 1, or making you go back to check the comps he thinks would be better than you used.
What is the answer? I don’t see us all joining this union because we are so independent and suspicious of anyone who wants money from us, but we really do need to unify somehow to save our profession. When someone says they have a class that will help you determine the exact, supportable adjustment for each cell in your report I know it is computer generated or calculator generated, so to me it is worthless. I can used paired sales, study the market trends and interview agents (if they will talk to me), but now they want those agents to inspect our subject for us and send photos so we sit at our desk and charge only $75 per appraisal doing a hybrid for the bank who will engineer and count on another bailout when the next crash happens to real estate.
I am open for suggestions, and interested in the consensus of fellow appraisers on the real definitions for urban, rural, suburban for appraisals because what the GSE says is east coast because they mainly live in Maryland or WDC, Boston, NYC or other areas like New Jersey which can be all three in an area of a 30 mile radius, and they can be in Times Square in no time, the most crowded intersection, maybe in the world, so what do you guys & gals think? We should be together on this and Mike, you have probably similar experience as I do, so I am waiting for your definitions, not the ones written by Dave Towne, which I thought were funny and entertaining!
Too hard to read with no line spacing. You are wrong about no new subdivisions on or along ridgeline of SAMO Mts. Re-read my description for Fairfax. You get folks N or S of 3rd in the purely sfr blocks and they go ballistic at being described as urban (though you are clearly right-it IS urban…though with a suburban character or ambiance in some areas.
No offense intended by the rest of your post is just too hard to read and follow. You may have had great points, but I’ll never know. Baggs used to be infamous for same thing.
Dez you’re the best! (formatting)
Deborah re MAI interview- (I) recall the stop Los Angelization of SD campaign! I was attending the original National Water Users Rights Committee mtg on Balboa Island at the time. (too bad they weren’t more successful).
I can’t speak to the Good Ol’ Boys Club of AI at the time though it was known to exist. Though my original mentor Kazue Yoshida (MAI); and a respected competitor of my next SRPA Mentor was Delores Waldren, MAI (SP?). Some of you did get through by persevering. Vicki Gill was moving up the ranks then too (SRA though). Sincerest respect for persevering.
As for the Hollywood Apartment, did you answer him that “Yes, Hollywood IS in Downtown Los Angles?” Or, at least the parts along Western Ave were (technically “Mid City” but for all intents and purposes ‘Downtown’. No question about it being urban (South of Franklin anyway); and a strong argument for North. Philosophical argument would be how far into Hollywood Hills (90046) before you are suburban again vs urban with almost all linkage down along Sunset?
No argument from me about non appraisers NOT being qualified to complete ANY of the significant sections of an appraisal form. NONE OF THEM! Not even the address and especially not the legal description or use.
The solutions are SO easy!
1. You can count on the AI to work toward everyone’s benefit [draw your own conclusions], though in my experience & personal observations ASA actually DOES try to help. Few years ago Columbia Society used to care also – then they were bought out by CoreLogic in attempt to ‘buy credulity’.
2. You can rely on state coalitions to resolve which are essentially NATIONAL issues or originated problems.
3. You can join any one of several National Coalitions or Associations. Some have good intentions. Some are suspect.
4. You can look up the colloquial definition of insanity (doing same thing over and over & expecting different results this time.
5. OR you can join the ONLY Appraisal Union actually trying to do something to help appraisers. I didn’t start out as a union guy – for a lot of reasons; but AGA is the ONE organization I found that encouraged us to try to win against overwhelming odds.
When appraisers have had enough of being kicked around; we will be there to help. In the meantime much of our focus is on helping appraisers to defend themselves against state boards run amok; and retaliatory third party complaints that shouldn’t even be allowed.
We’ve chatted before and I know some of your views. It just boils down to whether you want to hold your nose & fight back via the Guild which IS a union, or ‘accept’ what you are given through gritted teeth. Either way, you know you can always call and kick around ideas, and we’ll consciously avoid politics.
Best of luck to you no matter what you decide.
Mike: Last time I was in LA and after living there and working there for about 50 years, I never saw a ridgetop near Fairfax…. Beverly Park is at the top of the ridge overlooking LA with a panoramic view from up high, making the whole basin visible from your lot if you build two or more stories; those homes are up to 30,000 sf; no comparison to anything in Fairfax district. I’ve appraised one in Bel Air that was nearly 50K sf, so Fairfax is urban, period, I don’t care what the politically correct neighbors think of their own neighborhood. I am (or you are) the appraiser, and we say what is urban, suburban or rural.
Hell no! I told him Hollywood was a neighborhood name distinct from Downtown LA which is actually bounded on the north by the 101 and 110 to Pasadena, east of the Harbor (110) and west of the San Bernardino and 5 freeways. Hollywood is urban but not in Downtown LA which is a totally different animal.
There can’t be any subdivision any where near Fairfax that compares to the large lots in Beverly Park, yet I still would call it urban because of the density – and if you consider slopes which determine what you can build, you have to have a large lot to build a mansion for the most spoiled elite up in Beverly Park, compared to building condos that are mid-to high rise or whatever it was proposed in Fairfax, AND I would never describe Fairfax as suburban because it is truly URBAN!
So much for disagreeing with you, but I could testify in court on that, something I make sure of before I spout off with an opinion that another appraiser has concluded; sorry I am a review appraiser too, so I can be critical, and of course I know I am right, after studying urban planning and having my degree in that combined with my appraisal education and 40 years of experience.
I am still considering joining your union, but it is just one more business expense I can’t absorb right now, particularly because I have the impression it is run by republicans who are trumpsters, who I know is treasonous!
I have been beat up by your friend Baggins who is also a big mouth like me, only I don’t agree with him much, and he thinks he knows it all (what experienced appraiser doesn’t believe that?), so when you lay down with dogs, you can get fleas, which I am allergic to, so I am still hesitant to join a union that may be good, but I fear it is too little too late!
Go ahead, email me and try to convince me again, because at one time I really felt supportive of what you do, but I lost interest in being associated with your union because it seems somewhat self-serving, and I have lots of other appraisers wanting me to buy things that they say will increase my business, because I know appraisers who know what they are doing don’t invent computer programs that put us out of business, or convince the appraisers regressions are appropriate for sfr valuations! Those guys who are good at programming and have invented these non-USPAP compliant forms, UAD, and regression analyses to use for sfr appraising, which are, in my opinion, giving false solutions to appraisal problems that we are already taught how to deal with in professional coursework.
If I was a reviewer and I saw you mark Fairfax as suburban I would know you are from Orange County without having your address! sorry
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?
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.
Interesting perspective. In nearly 30 years I never heard urban/suburban/rural described that way…Then again there is much I’ve never heard of before.
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.
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.
David, even in a small city, you are describing an urban neighborhood with all those mixed uses. my humble opinion
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.
Pretty much agree. Until it is officially defined (by someone other than only AI), your definition is as good as any I’ve heard. it really is a local perception.
Was the article reposted? Came in a new article.
Dave, here is the answer to the “why” question – contained in your own article:
“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 complementary properties with less concentrated population than is typically found in an urban neighborhood.”
As long as the definition remains ambiguous in ALL so-called authoritative sources, we will continue to see this. Maybe definitions from the 1950’s or even 1960’s were more clear.