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Preservation raises US property value

A recent article in the Hartford Courant (Connecticut, USA) publicized two studies done by economist and historic preservationist Donovan Rypkema, studying the effects of historic district designation and property values. The first study evaluated the economic benefits of Connecticut’s historic tax credit incentive program, while the second specifically evaluated property values. The conclusion of both studies is that preservation “makes good economic sense” not only creating jobs but increasing property values. Similar results have emerged from additional studies, including one released by the Alabama State Historic Preservation Office in 2002.

The reports concluded that property values within designated historic districts rose faster than neighboring areas or metropolitan averages. The Connecticut study also noted that historic district designation did not, in any of the districts studied, reduce property values – a fact that should relieve the fears of some homeowners worried that potential restrictions may make it more challenging for them to sell their home. In reality, these studies showed that the restrictions sometimes instituted by local historic commissions are in fact the key factor in the rise in value noting, “character of the neighborhood is important, and the assurance that character will be maintained has an economic value.”

It should be noted that the level of restriction and the level of enforcement vary widely between localities, and that only local historic districts carry, or are capable of enforcing, these regulations. Listing in the National Register of Historic Places (NRHP) does not impose any regulations, restrictions, or requirements. Regardless, additional studies have been published noting that despite the lack of regulation, houses within NRHP districts also experience higher property values and that property owners may in fact get the most bang for their buck by being listed at both the national and local level.

The studies further reveal that homes in historic districts have a lower rate of foreclosure. In one district in Montgomery, AL the housing prices rose by 42 percent in pre- and post-designation, as compared to only eight percent for Montgomery as a whole. The annual average rates of return and the average annual price-appreciation were also notably higher; statistics which were consistent going back to the mid-1970s. The Alabama report poignantly concluded, “in all cases, it was found that historic designation has a positive and substantial impact on the value of properties located in a historic neighborhood. This conclusion is found to be true in the short-run… and in the long- run…”

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