Members of the steering committee have been meeting with neighbors in small groups by block and one of the questions that comes up over and over again is, “What is this going to do to my property values?” Some people are worried that being in a historic district will lead to ever rising property values which will, in turn, lead to ever rising property taxes. Others worry that when they go to sell their house, if the prospective new buyer can’t tear the house down and replace it, they’ll be less interested in purchasing the property, which could lead to reduced property values due to fewer interested buyers.
So, with this question in mind, the following studies and articles have been compiled so that residents can peruse them and try to get a better handle on what a historic district will mean for us.
by Lori Rotenberk. CityLab. June 20, 2019.
by Regina Cole. Forbes. Aug 20, 2018.
“Designation of local historic districts stabilizes and strengthens neighborhoods and commercial areas, typically enhancing property values as a result. “
“The results of the analysis show that, for the most part, the values of properties located within a local historic district increased at a similar or higher rate than in the comparison areas. Moreover, there is no evidence that local historic district designation has had a negative effect on either property values or sales prices within the five case study areas. In all cases, property values increased following designation mirroring the results of similar studies from other states. Also of note:
• The sales price per square feet of properties located within local historic districts increased at a similar or higher rate than in comparison areas in all but one case study area.
• Median sales prices of homes within local historic districts were higher, on average, than the median sales prices of homes in the surrounding neighborhood and/or city.
• Rates of property value appreciation varied considerably over time in both the local historic districts and comparison areas, suggesting that a range of factors beyond location within a historic district (such as building size, yard size, land use changes surrounding the district, and regional-level property market trends) influence changes in property values, and perhaps have an even greater influence than does historic district designation.
• Commercial properties located within a historic district experienced higher rates of property value appreciation than those located in the comparison area since designation, due largely to the investments made in the district for preservation activities.”
by Jonathan H. Todd. Urban Land. December 15, 2014.
The authors of a 2014 paper entitled, “Preserving History or Hindering Growth? The Heterogeneous Effects of Historic Districts on Local Housing Markets in New York City” (see below) “write, ‘If initial aesthetic levels are higher, preservation can increase value, both for the unit and total real estate.’ So the aesthetic argument still holds—many neighborhoods like Brooklyn Heights are valuable because of their aesthetic qualities, and the protection of these neighborhoods can add positive value. The authors found that after controlling for structural differences, a 20 percent premium is placed on properties located in areas that are or will become historic districts. It is in neighborhoods like these where the land value will indeed increase high enough to compensate for regulations like height or style restrictions.”
by Vicki Been, Ingrid Gould Ellen, Michael Gedal, Edward Glaeser, Brian J. McCabe. The National Bureau of Economic Research. NBER Working Paper No. 20446. Issued in September 2014
“Designation raises property values within historic districts, but only outside of Manhattan. In areas where the value of the option to build unrestricted is higher, designation has a less positive effect on property values within the district.”
by Bernadette Lowell. Urban Economics. April 30, 2013.
“From these regressions, I can conclude that the Lakewood historic designation significantly increases property value compared to the surrounding homes with the given data. Unfortunately, I cannot draw any conclusions after performing regressions on the Holloway District data.”
by PlaceEconomics. October 2011.
• Property values in every local historic district saw average increases in value ranging from 4% to over 19% per year.
• In three of the four communities the rate of value increase for properties within local historic districts was greater than for properties with no such protection.
• In “head to head” square-foot comparisons based on age and style, properties within local historic districts were worth more than similar properties not within the districts.
• Overall there appears to be a 2-4% value premium resulting from location within a local historic district.
• On a composite basis, the rate of foreclosure of properties within the historic districts was half the rate outside the districts.
by Akram M. Ijla. EngagedScholarship@CSU, Cleveland State University. 2008.
Residential properties located in designated historical districts had a positive and statistically significant difference in average price increases from comparable residential properties in similar districts not designated as historic. The analysis found that the effect of local historic designation on residential property values compared to similar properties in non-designated areas was larger for central cities located in slow growth areas as compared to outcomes in fast growth areas.
by Donovan D. Rypkema. Cultural Resource Management. Volume 25. No. 1. 2002.
“Using a variety of methodologies, conducted by a number of independent researchers, this analysis has been undertaken in New Jersey, Texas, Indiana, Georgia, Colorado, Maryland, North and South Carolina, Kentucky, Virginia, and elsewhere. The results of these studies are remarkably consistent: property values in local historic districts appreciate significantly faster than the market as a whole in the vast majority of cases and appreciate at rates equivalent to the market in the worst case. Simply put—local historic districts enhance property values.”