J Real Estate Finan Econ (2013) 46:543–563
Historic Preservation: Preserving Value?
Martin D. Heintzelman · Jason A. Altieri
Published online: 6 September 2011
© Springer Science+Business Media, LLC 2011
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 endo-
geneity 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.
Keywords Historic preservation · Hedonic analysis · Repeat sales ·
M. D. Heintzelman (
) · J. A. Altieri
School of Business, Clarkson University, P.O. Box 5790, Potsdam, NY 13699, USA