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Preserving history or restricting development? The heterogeneous effects of historic districts on local housing markets in New York City

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  • Been, Vicki
  • Ellen, Ingrid Gould
  • Gedal, Michael
  • Glaeser, Edward
  • McCabe, Brian J.

Abstract

Since Brooklyn Heights was designated as New York City's first landmarked neighborhood in 1965, the Landmarks Preservation Commission has designated 120 historic neighborhoods in the city. This paper develops a theory in which landmarking has heterogeneous impacts across neighborhoods and exploits variation in the timing of historic district designations in New York City to identify the effects of preservation policies on residential property markets. We combine data on residential transactions during the 35-year period between 1974 and 2009 with data from the Landmarks Preservation Commission on the location of the city's historic districts and the timing of the designations. Consistent with theory, properties just outside the boundaries of districts increase in value after designation. Further, designation raises property values within historic districts, but only outside of Manhattan. As predicted, impacts are more positive in areas where the value of the option to build unrestricted is lower. Impacts also appear to be more positive in districts that are more aesthetically appealing.

Suggested Citation

  • Been, Vicki & Ellen, Ingrid Gould & Gedal, Michael & Glaeser, Edward & McCabe, Brian J., 2016. "Preserving history or restricting development? The heterogeneous effects of historic districts on local housing markets in New York City," Journal of Urban Economics, Elsevier, vol. 92(C), pages 16-30.
  • Handle: RePEc:eee:juecon:v:92:y:2016:i:c:p:16-30
    DOI: 10.1016/j.jue.2015.12.002
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    References listed on IDEAS

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    1. Rosenthal, Stuart S. & Ross, Stephen L., 2015. "Change and Persistence in the Economic Status of Neighborhoods and Cities," Handbook of Regional and Urban Economics, Elsevier.
    2. Asabere, Paul K & Huffman, Forrest E & Mehdian, Seyed, 1994. "The Adverse Impacts of Local Historic Designation: The Case of Small Apartment Buildings in Philadelphia," The Journal of Real Estate Finance and Economics, Springer, vol. 8(3), pages 225-234, May.
    3. Douglas S. Noonan, 2007. "Finding an Impact of Preservation Policies: Price Effects of Historic Landmarks on Attached Homes in Chicago, 1990-1999," Economic Development Quarterly, , vol. 21(1), pages 17-33, February.
    4. Carruthers, John I & Clark, David E & Tealdi, Michael, 2010. "The Demand for Historic Preservation," Working Papers and Research 2010-02, Marquette University, Center for Global and Economic Studies and Department of Economics.
    5. Martin Heintzelman & Jason Altieri, 2013. "Erratum to: Historic Preservation: Preserving Value?," The Journal of Real Estate Finance and Economics, Springer, vol. 46(3), pages 564-564, April.
    6. Clapp, John M. & Salavei, Katsiaryna, 2010. "Hedonic pricing with redevelopment options: A new approach to estimating depreciation effects," Journal of Urban Economics, Elsevier, vol. 67(3), pages 362-377, May.
    7. Richard J. Arnott & Joseph E. Stiglitz, 1979. "Aggregate Land Rents, Expenditure on Public Goods, and Optimal City Size," The Quarterly Journal of Economics, Oxford University Press, vol. 93(4), pages 471-500.
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    9. Douglas S. Noonan & Douglas J. Krupka, 2011. "Making—or Picking—Winners: Evidence of Internal and External Price Effects in Historic Preservation Policies," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 39(2), pages 379-407, June.
    10. N. Edward Coulson & Michael L. Lahr, 2005. "Gracing the Land of Elvis and Beale Street: Historic Designation and Property Values in Memphis," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 33(3), pages 487-507, September.
    11. Robin M. Leichenko & N. Edward Coulson & David Listokin, 2001. "Historic Preservation and Residential Property Values: An Analysis of Texas Cities," Urban Studies, Urban Studies Journal Limited, vol. 38(11), pages 1973-1987, October.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Skyscrapers and Cities: A Q&A Interview with Edward Glaeser (Part II)
      by Jason Barr in Building the skyline on 2018-09-12 12:11:41

    Citations

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    Cited by:

    1. Christian A. L. Hilber & Charles Palmer & Edward W. Pinchbeck, 2017. "The Energy Costs of Historic Preservation," SERC Discussion Papers 0217, Spatial Economics Research Centre, LSE.
    2. Dericks, Gerard & Koster, Hans R. A., 2018. "The billion pound drop: the blitz and agglomeration economics in London," LSE Research Online Documents on Economics 88694, London School of Economics and Political Science, LSE Library.
    3. repec:taf:jpropr:v:34:y:2017:i:3:p:211-232 is not listed on IDEAS
    4. Enwei Zhu & Stanislav Sobolevsky, 2018. "House Price Modeling with Digital Census," Papers 1809.03834, arXiv.org.
    5. Nikhil Naik & Ramesh Raskar & César A. Hidalgo, 2016. "Cities Are Physical Too: Using Computer Vision to Measure the Quality and Impact of Urban Appearance," American Economic Review, American Economic Association, vol. 106(5), pages 128-132, May.
    6. Sevrin Waights, 2016. "The Preservation of Historic Districts - Is it Worth it?," SERC Discussion Papers 0202, Spatial Economics Research Centre, LSE.

    More about this item

    Keywords

    Historic districts; Housing; Option value;

    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare

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