Historic District Influence on House Prices and Marketing Duration
Posted: 4 Dec 2013
Date Written: December 3, 2013
Historic property designations have been lauded for spurring renovation beyond the historic structures themselves through positive externalities in surrounding neighborhoods. Previous historic district research focuses on whether historic designation results in a price premium. This paper takes a more comprehensive look at the buying process, which must consider marketing duration within the historic district as well as influences on the sale of properties adjacent to the historic district. We examine how historic district designation in Baton Rouge, Louisiana is capitalized either through a price premium or marketing duration and how that mechanism differs between neighborhoods inside and outside the historic district boundaries. We employ a three stage least square, 3SLS, model to account for the effects of endogenous marketing duration on price capitalization estimates. The estimates are consistent with search-market theory in that marketing duration absorbs part of the capitalization of historic designation. We find the the more certain benefits from historic designation within the district are reflected in a price premium while the reduced regulation coupled with the cachet of being located near but not inside the district results in shorter marketing duration.
Keywords: Historic districts; House price; Marketing duration; Search model
Suggested Citation: Suggested Citation