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Historic Designation and
Your Property Values
One of the most frequently
asked questions regarding historic designation is the effect it may have on
private property values. In numerous studies across the country, economists have
found that historic designation, either on the National Register of Historic
Places or a local register or both, has no negative impact on the sales price of
residential property. In many instances, the effect is highly positive with
sales prices increasing at a higher rate than other comparable properties. Of
course, the impact of historic designation can vary considerably according to
the particular local conditions, but the general pattern is consistent and
clear. Historic designation does not restrain property value growth compared
with non-historic property and often is associated with accelerating growth well
above that of non-historic property.
These conclusions are
demonstrated in an economics study of historic designation in the City of
Phoenix. Phoenix has had for many years an active historic preservation program
and 35 neighborhoods are now listed on the City's historic property register,
the National Register of Historic Places, or both. The results of the study are
summarized in the chart below. Controlling for the size of the house,
residential sales prices in City-designated historic districts can be seen to be
increasing at a slightly greater rate than residential property in Phoenix as a
whole. Furthermore, single-family, owner-occupied houses in National
Register-listed historic districts enjoy an additional benefit from the State of
Arizona historic property tax reclassification program, which translates to an
even higher rate of return to homeowners.
Fears that historic
designation will harm property owners' return on investment have been found to
be groundless. By instilling pride in neighborhood, encouraging reinvestment,
and controlling against incompatible development, historic districts are a
valuable tool in maintaining the economic viability of older neighborhoods as
livable communities for home-owning households.
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