Can mixed land uses in a residential neighborhood ever enhance home values, according to Fannie Mae?
Correct Answer
C) Yes, factors such as access to jobs can increase demand
Dwellings typically keep value best among similar dwellings, but factors typical of mixed-use areas, such as easy access to employment centers and community activity, can enhance value through increased buyer demand.
Why This Is the Correct Answer
Option C is correct because Fannie Mae states that some factors typical of a mixed-use neighborhood, such as easy access to employment centers and a high level of community activity, can enhance the market value of the property through increased buyer demand. The effect depends on the market. Mixed use can therefore support value rather than only detract from it.
Why the Other Options Are Wrong
Option A: No, mixed uses reduce residential value in each case
Option A says mixed uses reduce residential value in each case. Fannie Mae recognizes that mixed-use features like access to jobs and community activity can enhance value, so a reduction in every case is not correct.
Option B: No, mixed-use neighborhoods are ineligible for Fannie Mae
Option B says mixed-use neighborhoods are ineligible for Fannie Mae. The Guide discusses how mixed-use factors can enhance value through buyer demand, which shows such neighborhoods are not excluded on that basis.
Option D: Yes, but only when commercial uses exceed half the area
Option D says the enhancement applies only when commercial uses exceed half the area. The Guide sets no such percentage condition; it ties the enhancement to factors like employment access and community activity that increase buyer demand.
Mix Can Mean Demand
Jobs and activity nearby can draw buyers in. A mixed neighborhood is judged by how buyers respond, not by a blanket rule.
How to use: Use this reminder when a question claims mixed uses are harmful in every case.
Exam Tip
Watch for options that state mixed uses reduce value in each case or impose eligibility bans. Fannie Mae guidance allows for value enhancement through buyer demand.
Common Mistakes to Avoid
- -Assuming mixed land uses reduce residential value in every case
- -Believing mixed-use neighborhoods are automatically ineligible for Fannie Mae loans
- -Inventing a percentage threshold for commercial uses
Concept Deep Dive
Analysis
This question tests Fannie Mae's guidance on mixed land uses in residential neighborhoods. Dwellings typically hold value best among similar dwellings, but the Guide recognizes that some mixed-use factors, such as easy access to employment and a high level of community activity, can increase buyer demand. Candidates should avoid answers that treat mixed use as harmful in every case or as an eligibility bar.
Background Knowledge
The principle of conformity suggests that homes tend to hold value best among similar homes, but market evidence can show that nearby non-residential uses add appeal. Walkable access to shops, jobs and activity can increase demand in some markets. Appraisers analyze the actual market reaction to mixed uses rather than assuming a positive or negative effect.
Real-World Application
An appraiser values a townhouse a short walk from an office district, cafes and a transit stop. Sales data show buyers pay more for homes near that activity than for similar homes in a purely residential area farther out. She reports the mixed-use setting as a positive location influence supported by the market.
More Market Questions
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Under USPAP Standards Rule 1-3(a), which item must an appraiser identify and analyze when necessary for credible results in a market value assignment?
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Under Fannie Mae Selling Guide B4-1.3-08 (Comparable Sales), a minimum of three closed (settled) comparables must be reported; contract offerings and current listings may be used only as supporting data. The subject is in a new (or recently converted) condo project, subdivision, or PUD with no settled sales inside because the subject transaction is among the first units to sell. Which statement correctly describes the Guide’s pending-sale exception?