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Historic Preservation: Preserving Value?

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  • Martin Heintzelman
  • Jason Altieri

Abstract

The creation of historic districts has become a common way to preserve historic buildings and neighborhoods. Advocates of historic districts assume that such districts augment, or at least, protect property values for homes within these districts. The existing economic literature supports this conclusion, but most studies seem to fall victim to an endogeneity bias since higher value homes are, all else equal, more likely to be included in districts. This study uses repeat-sales fixed effects (difference-in-differences) analysis to look at homes before and after the creation of districts in the Boston-Cambridge-Quincy MSA between 2000 and 2007, and thus control for this endogeneity bias. Secondarily, we re-examine the effects of a Massachusetts preservation policy, the Community Preservation Act (CPA) which, in part, supports historic preservation. We find evidence that the creation of a local historic district, on average, reduces home prices for homes in that district between 11.6 and 15.5%. This indicates that any restrictions implied by the creation of a district outweigh any benefits to homeowners within the district. If, instead, census block fixed effects are employed, the analysis shows a statistically insignificant impact, the sign and magnitude of which depends on the specification. Taken together with the repeat sales result, this confirms our intuition about the importance of controlling for omitted variables and endogeneity biases. Finally, we find evidence that the CPA also lowers property values, by less than 1%, and that being in a Historic District magnifies the negative effect of the CPA. Copyright Springer Science+Business Media, LLC 2013

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  • Martin Heintzelman & Jason Altieri, 2013. "Historic Preservation: Preserving Value?," The Journal of Real Estate Finance and Economics, Springer, vol. 46(3), pages 543-563, April.
    • Handle: RePEc:kap:jrefec:v:46:y:2013:i:3:p:543-563
    DOI: 10.1007/s11146-011-9338-8
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    Cited by:

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    2. Lucy Rossiter & Kai Gu, 2023. "The Impact of Special Character Areas on Property Values and Homeowners’ Experiences: Cases from Auckland, New Zealand," Land, MDPI, vol. 12(6), pages 1-16, June.
    3. Portillo, Javier E. & Wagner, Gary A., 2021. "Do cultural districts spur urban revitalization: Evidence from Louisiana," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 651-673.
    4. Tetsuharu Oba & Douglas Simpson Noonan, 2020. "The Price of Preserving Neighborhoods: The Unequal Impacts of Historic District Designation," Economic Development Quarterly, , vol. 34(4), pages 343-355, November.
    5. Vicki Been & Ingrid Gould Ellen & Michael Gedal & Edward Glaeser & Brian J. McCabe, 2014. "Preserving History or Hindering Growth? The Heterogeneous Effects of Historic Districts on Local Housing Markets in New York City," NBER Working Papers 20446, National Bureau of Economic Research, Inc.
    6. Jamie Bologna Pavlik & Yang Zhou, 2023. "Are historic districts a backdoor for segregation? Yes and no," Contemporary Economic Policy, Western Economic Association International, vol. 41(3), pages 415-434, July.
    7. Shangyi Zhou & Shaobo Zhang, 2015. "Contextualism and Sustainability: A Community Renewal in Old City of Beijing," Sustainability, MDPI, vol. 7(1), pages 1-20, January.
    8. Velma Zahirovic-Herbert & Karen Gibler, 2014. "Historic District Influence on House Prices and Marketing Duration," The Journal of Real Estate Finance and Economics, Springer, vol. 48(1), pages 112-131, January.
    9. Qiu, Feng & Tong, Qingmeng, 2021. "A spatial difference-in-differences approach to evaluate the impact of light rail transit on property values," Economic Modelling, Elsevier, vol. 99(C).
    10. Caixia Liu & Xiaolong Liu, 2022. "Adaptive Reuse of Religious Heritage and Its Impact on House Prices," The Journal of Real Estate Finance and Economics, Springer, vol. 64(1), pages 71-92, January.
    11. Been, Vicki & Ellen, Ingrid Gould & Gedal, Michael & Glaeser, Edward & McCabe, Brian J., 2016. "Preserving history or restricting development? The heterogeneous effects of historic districts on local housing markets in New York City," Journal of Urban Economics, Elsevier, vol. 92(C), pages 16-30.
    12. Mario A. Fernandez & Shane L. Martin, 2020. "What’s so special about character?," Urban Studies, Urban Studies Journal Limited, vol. 57(16), pages 3236-3251, December.
    13. Zhou, Yang, 2021. "The political economy of historic districts: The private, the public, and the collective," Regional Science and Urban Economics, Elsevier, vol. 86(C).

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