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Historic Designation and Residential Property Values

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  • Andrew Narwold

    ()
    (Professor of Economics, School of Business Administration, University of San Diego, 5998 Alcala Park, San Diego, CA 92110)

  • Jonathan Sandy

    ()
    (Professor of Economics, School of Business Administration, University of San Diego)

  • Charles Tu

    ()
    (Associate Professor of Real Estate, Burnham-Moores Center for Real Estate, University of San Diego)

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    Abstract

    The State of California enacted the Mills Act in 1972. This act allows local municipalities the option of setting up a historic designation program. The main feature of the program is to allow the owners of historic buildings a reduction in their property taxes in return for an agreement to not alter the exterior façade of the designated building. This paper uses hedonic regression analysis to estimate the impact of the historic designation on the value of single-family residences in the City of San Diego. The results suggest that the designation creates a 16 percent increase in housing value. This is higher than the capitalization of the property tax savings would suggest, implying market value in the historic designation itself. The Mills Act represents an innovative approach to historic structure management and may provide guidance to governments elsewhere in the U.S. as well as internationally when designing historic preservation programs.

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    Bibliographic Info

    Article provided by Asian Real Estate Society in its journal International Real Estate Review.

    Volume (Year): 11 (2008)
    Issue (Month): 1 ()
    Pages: 83-95

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    Handle: RePEc:ire:issued:v:11:n:01:2008:p:83-95

    Contact details of provider:
    Postal: Asia Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
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    Web page: http://www.asres.org/

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    Postal: Asian Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
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    Web: http://www.asres.org/

    Related research

    Keywords: historic designation; housing values; hedonic model;

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    References

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    1. Peter F. Colwell & Carolyn A. Dehring & Nicholas A. Lash, 2000. "The Effect of Group Homes on Neighborhood Property Values," Land Economics, University of Wisconsin Press, vol. 76(4), pages 615-637.
    2. Donald A. Coffin, 1989. "The Impact of Historical Districts on Residential Property Values," Eastern Economic Journal, Eastern Economic Association, vol. 15(3), pages 221-228, Jul-Sep.
    3. David E. Clark, 2000. "The Impact of Public School Attributes on Home Sale Prices in California," Growth and Change, Gatton College of Business and Economics, University of Kentucky, vol. 31(3), pages 385-407.
    4. Deborah Ann Ford, 1989. "The Effect of Historic District Designation on Single-Family Home Prices," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 17(3), pages 353-362.
    5. Oded Palmon & Baron A. Smith, 1998. "New Evidence on Property Tax Capitalization," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 1099-1128, October.
    6. Elena G. Irwin, 2002. "The Effects of Open Space on Residential Property Values," Land Economics, University of Wisconsin Press, vol. 78(4), pages 465-480.
    7. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-75, June.
    8. Hamilton, Bruce W, 1976. "Capitalization of Intrajurisdictional Differences in Local Tax Prices," American Economic Review, American Economic Association, vol. 66(5), pages 743-53, December.
    9. Coulson, N Edward & Leichenko, Robin M, 2001. "The Internal and External Impact of Historical Designation on Property Values," The Journal of Real Estate Finance and Economics, Springer, vol. 23(1), pages 113-24, July.
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    Cited by:
    1. Gabriel M. Ahlfeldt & Kristoffer Moeller & Sevrin Waights & Nicolai Wendland, 2013. "Game of Zones: The Economics of Conservation Areas," SERC Discussion Papers 0143, Spatial Economics Research Centre, LSE.
    2. 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.
    3. Lyons, Sean & Mayor, Karen & Moro, Mirko & Tol, Richard S J, 2011. "Does the housing market reflect cultural heritage? A case study of Greater Dublin," Stirling Economics Discussion Papers 2011-07, University of Stirling, Division of Economics.

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