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Historic Buildings and Rehabilitation Expenditures: A Panel Data Approach

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Author Info

  • Philippe Cyrenne

    ()
    (Department of Economics, The University of Winnipeg, 515 Portage Avenue, Winnipeg, Manitoba, Canada R3B 2E9)

  • Robert Fenton

    ()
    (Department of Economics, The University of Winnipeg, 515 Portage Avenue, Winnipeg, Manitoba, Canada R3B 2E9)

  • Joseph Warbanski

    (Joseph Warbanski Consultants, 678 Sherburn St., Winnipeg, Manitoba, Canada R3G 2L2)

Abstract

This paper examines the relationship between the characteristics of buildings and their assessed value in a historic area in Winnipeg, Manitoba Canada. Using a unique panel data set, we use a hedonic model to examine the factors that have affected the market value assessments of a set of historic and non-historically designated buildings. Using a number of estimators, we find that controlling for a number of key characteristics of buildings, that the assessed value of a building is higher for some classes of historic buildings. In addition, we estimate a two stage Heckman sample selection model, to determine the factors that influence the rehabilitation decision, and the effect of those expenditures and other building characteristics on the change in assessed values of buildings. We find that the expenditures on renovations contribute significantly to the change in assessed values of buildings, although less than might be expected. We provide a rationale for this result and also discuss the factors that influence the probability of renovation of a building as well as the change in their assessed values. Apart from the above, a number of interesting empirical results are also reported which may be used as input into the design of cost effective rehabilitation strategies for historic preservation.

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File URL: http://aux.zicklin.baruch.cuny.edu/jrer/papers/pdf/past/vol28n04/02.349_380.pdf
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Bibliographic Info

Article provided by American Real Estate Society in its journal journal of Real Estate Research.

Volume (Year): 28 (2006)
Issue (Month): 4 ()
Pages: 349-380

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Handle: RePEc:jre:issued:v:28:n:4:2006:p:349-380

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Postal: American Real Estate Society Clemson University School of Business & Behavioral Science Department of Finance 401 Sirrine Hall Clemson, SC 29634-1323
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Web page: http://www.aresnet.org/

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Postal: Diane Quarles American Real Estate Society Manager of Member Services Clemson University Box 341323 Clemson, SC 29634-1323
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Web: http://aux.zicklin.baruch.cuny.edu/jrer/about/get.htm

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References

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  1. Hausman, Jerry A & Taylor, William E, 1981. "Panel Data and Unobservable Individual Effects," Econometrica, Econometric Society, vol. 49(6), pages 1377-98, November.
  2. Burgess, James F, Jr & Harmon, Oskar R, 1991. "Specification Tests in Hedonic Models," The Journal of Real Estate Finance and Economics, Springer, vol. 4(4), pages 375-93, December.
  3. Hausman, Jerry A, 1978. "Specification Tests in Econometrics," Econometrica, Econometric Society, vol. 46(6), pages 1251-71, November.
  4. J. Walter Milon & Jonathan Gressel & David Mulkey, 1984. "Hedonic Amenity Valuation and Functional Form Specification," Land Economics, University of Wisconsin Press, vol. 60(4), pages 378-387.
  5. Bond, E.W. & Coulson, N.E., 1988. "A Hedonic Approach To Residential Succession," Papers 2-88-1, Pennsylvania State - Department of Economics.
  6. Follain, James R. & Jimenez, Emmanuel, 1985. "Estimating the demand for housing characteristics: A survey and critique," Regional Science and Urban Economics, Elsevier, vol. 15(1), pages 77-107, February.
  7. Andrew J. Plantinga & Douglas J. Miller, 2001. "Agricultural Land Values and the Value of Rights to Future Land Development," Land Economics, University of Wisconsin Press, vol. 77(1), pages 56-67.
  8. 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.
  9. Quigley, John M & Rubinfeld, Daniel L, 1989. "Unobservables in Consumer Choice: Residential Energy and the Demand for Comfort," The Review of Economics and Statistics, MIT Press, vol. 71(3), pages 416-25, August.
  10. J. Andrew Hansz & Julian Diaz III, 2001. "Valuation Bias in Commercial Appraisal: A Transaction Price Feedback Experiment," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 29(4), pages 553-565.
  11. Paul K. Asabere & Forrest E. Huffman, 1991. "Historic Districts and Land Values," Journal of Real Estate Research, American Real Estate Society, vol. 6(1), pages 1-8.
  12. Mingche M. Li & H. James Brown, 1980. "Micro-Neighborhood Externalities and Hedonic Housing Prices," Land Economics, University of Wisconsin Press, vol. 56(2), pages 125-141.
  13. Richard A. Graff & Michael S. Young, 1999. "The Magnitude of Random Appraisal Error in Commercial Real Estate Valuation," Journal of Real Estate Research, American Real Estate Society, vol. 17(1), pages 33-54.
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Citations

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Cited by:
  1. Paolo Rosato & Anna Alberini & Valentina Zanatta & Margaretha Breil, 2010. "Redeveloping derelict and underused historic city areas: evidence from a survey of real estate developers," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 53(2), pages 257-281.
  2. Çağlayan Ebru & Arikan Eban, 2011. "Determinants of house prices in Istanbul: a quantile regression approach," Quality & Quantity: International Journal of Methodology, Springer, vol. 45(2), pages 305-317, February.
  3. Douglas Noonan & Douglas Krupka, 2010. "Determinants of historic and cultural landmark designation: why we preserve what we preserve," Journal of Cultural Economics, Springer, vol. 34(1), pages 1-26, February.
  4. Rickman, Dan S., 2009. "Neighborhood Historic Preservation Status and Housing Values in Oklahoma County, Oklahoma," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 39(2).

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