The Appraisal Conundrum

Published: Wednesday, August 6, 2008 7:17 PM PDT

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Banks are more and more stringent these days about what appraisers are mandated to include in their appraisals. Some require a list of three comparable sales within the last three months within a mile of the house in question. One appraiser I talk to all the time said he's been submitting eight or nine comps in some of his appraisals -- double or triple the number he included a few years ago.

I wanted to wrap up a conversation we started a couple of weeks ago when I wrote this story about City Heights. I shared a note from a reader who'd been frustrated out of buying a North Park home when the appraisal for the house came in too low. The reader theorized that was because the house was affected by "comparable" but lower-priced sales in City Heights.

Reader J quibbled with that reader's distinction between the two communities:

I would make the argument that with very limited exceptions, the one is no better than the other and yes proximity counts. You'll notice there are no barrios around RSF Del Mar or La Jolla. I live in North Park and while it improved quite a bit during the boom it's still almost exclusively blue collar housing.  People who act shocked at North parks status are really going to be shocked when they see its not the next La Jolla, and that its more likely to revert to its blue collar housing roots than keep gentrifying.

North Park and City Heights are not the only neighborhoods where real or perceived urban boundaries can dramatically affect values. We see it everywhere. You need to look no further than Hillcrest, immediately west of North Park. Property values change with the zip code boundary at Georgia Street. However, with North Park now starting to develop a cachet all its own, the price gradient between North Park and City Heights may have increased at a faster rate in the past few years than the differential between Hillcrest and North Park.

 

Examples of steep price gradients abound throughout the San Diego region. Think about the south end of La Jolla, compared with the north end of Pacific Beach, or values in Del Mar compared with homes immediately east of I-5 in Carmel Valley.

-- KELLY BENNETT