Historic Preservation: Preserving Value?



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.


Historic preservation Hedonic analysis Repeat sales Regulation 


  1. Ahlfeldt, G. M., & Maennig, W. (2010). Substitutability and complementarity of urban amenities: External effects of built heritage in berlin. Real Estate Economics, 38(2), 285–323.CrossRefGoogle Scholar
  2. Asabere, P. K., Hachey, G., & Grubaugh, S. (1989). Architecture, historic zoning, and the value of homes. Journal of Real Estate Finance and Economics, 2, 181–195.CrossRefGoogle Scholar
  3. Asabere, P. K., Huffman, F. E., & Mehdian, S. (1994). The adverse impacts of local historic designation: The case of small apartment buildings in philadelphia. Journal of Real Estate Finance and Economics, 8(3), 225–234.CrossRefGoogle Scholar
  4. Bertrand, M., Duflo, E., & Mullainathan, S. (2004). How much should we trust differences-in-differences estimates? Quarterly Journal of Economics, 119, 249–275.CrossRefGoogle Scholar
  5. Brueckner, J. K. (1982). A test for allocative efficiency in the local public sector. Journal of Public Economics, 19, 311–331.CrossRefGoogle Scholar
  6. Cameron, A. C., & Trivedi, P. K. (2010). Microeconometrics using stata. College Station: Stata Press.Google Scholar
  7. Clark, D. E., & Herrin, W. E. (1997). Historical preservation districts and home sale prices: Evidence from the sacramento housing market. The Review of Regional Studies, 27(1), 29–48.Google Scholar
  8. Coffin, D. (1989). The impact of historic districts on residential property values. Eastern Economics Journal, 15(3), 221–228.Google Scholar
  9. Coulson, N. E., & Lahr, M. L. (2005). Gracing the land of elvis and beale street: Historic designation and property values in memphis. Real Estate Economics, 33, 487–507.CrossRefGoogle Scholar
  10. Coulson, N. E., & Leichenko, R. M. (2010). The internal and external impact of historical designation on property values. Journal of Real Estate Finance and Economics, 23(1), 113–124.CrossRefGoogle Scholar
  11. Dye, R. F., & McMillen, D. P. (2007). Teardowns and land values in the chicago metropolitan area. Journal of Urban Economics, 61, 45–63.CrossRefGoogle Scholar
  12. Glaeser, E. L., & Gyourko, J. (2003). The impact of building restrictions on housing affordability. Economic Policy Review - Federal Reserve Bank of New York, 9(2), 21–39.Google Scholar
  13. Glaeser, E. L., & Ward, B. A. (2009). The causes and consequences of land use regulation: Evidence from greater boston. Journal of Urban Economics, 65(3), 265–278.CrossRefGoogle Scholar
  14. Greenstone, M., & Gayer, T. (2009). Quasi-experiments and experimental approaches to environmental economics. Journal of Environmental Economics and Management, 57, 21–44.CrossRefGoogle Scholar
  15. Halvorsen, R., & Palmquist, R. (1980). The interpretation of dummy variables in semilogarithmic equations. American Economic Review, 70(3), 474–475.Google Scholar
  16. Heintzelman, M. D. (2010a). Measuring the property value effects of land-use and preservation referenda. Land Economics, 86(1), 22–47.Google Scholar
  17. Heintzelman, M. D. (2010b). The value of land use patterns and preservation policies. The B.E. Journal of Economics Analysis and Policy (Topics), 10(1), Article 39.Google Scholar
  18. Ihlanfeldt, K. R. (2007). The effect of land use regulation on housing and land prices. Journal of Urban Economics, 61, 420–435.CrossRefGoogle Scholar
  19. Leichenko, R. M., Coulson, N. E., & Listokin, D. (2001). Historic preservation and residential property values: An analysis of texas cities. Urban Studies, 38(11), 1973–1987.CrossRefGoogle Scholar
  20. LeSage, J. P., & Pace, R. K. (2009). Introduction to spatial econometrics. Chapman and Hall, CRC Press.Google Scholar
  21. McMillen, D. P. (2006). Teardowns: Costs, benefits, and public policy. Land Lines, 18(3), 2–7.Google Scholar
  22. Noonan, D. S. (2007). Finding an impact of preservation policies: Price effects of historic landmarks on attached homes in chicago, 1990–1999. Economic Development Quarterly, 21(1), 17–33.CrossRefGoogle Scholar
  23. Noonan, D. S., & Krupka, D. (2010). Determinants of historic and cultural landmark designation: Why we preserve what we preserve. Journal of Cultural Economics, 34(1), 1–26.CrossRefGoogle Scholar
  24. Noonan, D. S., & Krupka, D. J. (2011). Making- or picking-winners: Evidence of internal and external price effects in historic preservation policies. Real Estate Economics, 39(2), 579–407.CrossRefGoogle Scholar
  25. Parmeter, C., & Pope, J. C. (2011). Quasi-experiments and hedonic property value methods. In J. A. List, & M. K. Price (Eds.), Handbook on experimental economics and the environment. Edward Elgar Publishing.Google Scholar
  26. Sirmans, G. S., MacDonald, L., Macpherson, D. A., & Zietz, E. N. (2006). The value of housing characteristics: A meta analysis. Journal of Real Estate Finance and Economics, 33, 215–240.CrossRefGoogle Scholar
  27. Sirmans, G. S., Macpherson, D. A., & Zietz, E. N. (2005). The composition of hedonic pricing models. Journal of Real Estate Literature, 13(1), 3–43.Google Scholar
  28. Taylor, L. O. (2003). The hedonic method. In P. A. Champ, K. J. Boyle, & T. C. Brown (Eds.), A primer on nonmarket valuation. The economics of non-market goods and resources, (Vol. 3). Kluwer Academic Publishers.Google Scholar

Copyright information

© Springer Science+Business Media, LLC 2011

Authors and Affiliations

  1. 1.School of BusinessClarkson UniversityPotsdamUSA

Personalised recommendations