©2011 Cengage Learning

Chapter 8 ©2011 Cengage Learning NEIGHBORHOODS: CLUSTERS OF LAND USE AND VALUE

A neighborhood is a cluster of properties of relatively similar land use and value which Influences include: Topography Transportation Social (including education level, income, etc.) Political Activities cluster Zoning Deed restrictions ©2011 Cengage Learning The Neighborhood as the Basis of Value

“Location, location, location…” Real estate has a fixed location and cannot escape the immediate surroundings, neighborhood, community, and region. The value of property is a function of its location. ©2011 Cengage Learning

The value of property is a function of the physical property itself. The size and quality of the improvement matter. Age Condition Quality Charm Renovation Mechanical features ©2011 Cengage Learning Physical features include:

Location Neighborhood includes proximity to: Transportation Employment Shopping Desired cultural facilities Influence of any nuisance ©2011 Cengage Learning The sum of all the topographical, transport, and other influences on land that characterize a particular neighborhood nucleus.

Boundaries may be sharply defined or transition in a gradual merging. Physical features can define neighborhood boundaries including: Lakes Rivers Freeways Railroad tracks Major highway Sudden change in topography ©2011 Cengage Learning Neighborhood boundaries are created where one neighborhood ends and another begins.

The Four Forces of Change 1.Physical Factors - flood, tornado, earthquake, slides, etc. 2.Political Factors - taxation, education, level of fire and police services, change in zoning, etc. 3.Social Factors - age distribution of population, religious, education, lifestyles, etc. 4.Economic Factors - income levels, employment, infrastructure, etc. ©2011 Cengage Learning Neighborhoods as Barometers of Change

Neighborhood change will depend on the type of neighborhood such as residential, commercial, and industrial. Condition - age of improvements, maintenance, style, etc. Turnover Rate - this includes age distribution, unpleasant conditions, etc. Use Change - new development, redevelopment, zone changes, etc. Density of Occupancy - renting of rooms, dividing of space for other users, etc. ©2011 Cengage Learning Signals of a changing neighborhood:

Real Estate professionals should ask, “What does all this change mean?” “How does it affect real estate markets and values?” Changing neighborhoods can be studied to determine the forces causing the shift. ©2011 Cengage Learning

Some type of life sequence occurs in all neighborhoods For example, without maintenance buildings deteriorate and decay with age. With economic incentives, improvements can be made & uses transition to pressures to develop higher and better uses. ©2011 Cengage Learning As Neighborhoods Age

Many cities have experienced repeated rehabilitation cycles sometimes significant or just small ripples. The recovery period attracts new occupants with different income levels & density of occupancy from the present occupants. Such cycles can have long term significant momentum as compared to cycles that do not have sustainable force. ©2011 Cengage Learning

It may not be possible to fight decay to the degree that the problem is solved! The forces in action may not be changed except in the normal slow course of cycles. Transitional areas often can take advantage of favorable transportation, convenience to shopping, and location to amenities. Zoning incentives could encourage developers to revitalize areas, rather than allowing new uses of relatively vacant areas. ©2011 Cengage Learning Learning to Fight Decay

The Rehabilitation Cycle Neighborhood life cycles Recovery period signs Interruption by a major change in land use Destabilizing forces ©2011 Cengage Learning