The impact of historic preservation policies on housing values

Abstract

Historic preservation dwellings offer qualities that benefit both owners and society. At the same time, preservation policies might include some costs and restrictions. Although many studies have aimed to assess the impact of historic preservation on housing values, this study, to our knowledge, is the first to investigate whether the historic preservation premium is due to the changed juridical status (a policy effect), or the qualities observed by the buyers that are unobserved in the model. By using a unique data set that combines data of preserved historic dwellings in Oslo, Norway, and data from the housing market from 1990 to 2017, we study sales prices for the same dwellings both before and after historic preservation. The higher prices of preserved historic dwellings seem to be caused by qualities in the dwellings that correlate with the forthcoming historic preservation, and not by the policy itself.

Keywords:

• Historic preservation
• housing policies
• housing values
• fixed effects
• differences-in-differences

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 Koziot and Einen (2016) conducted the survey based on a national representative sample of 1067 respondents in Norway.

2 Hausman specification test statistics: χ² (28) = 275.60. Prob. > χ² = 0.0000.

3 That some owners might be willing to act on the incentives that are created by the law might here be seen as an extension of the rationale behind the law, where the lawmakers have decided that it is necessary to safeguard dwellings historical qualities from destruction from its owners.

4 This study does not aim to propose administrative solutions, but we want to stress that policymakers and those that administrate the historical preservation policy need to think about the possible negative conclusions the law could create.