Historic District Influence on House Prices and Marketing Duration

Posted: 4 Dec 2013

See all articles by Velma Zahirovic-Herbert

Velma Zahirovic-Herbert

University of Georgia

Karen M Gibler

Georgia State University - Department of Real Estate

Date Written: December 3, 2013

Abstract

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

Zahirovic-Herbert, Velma and Gibler, Karen M, Historic District Influence on House Prices and Marketing Duration (December 3, 2013). Journal of Real Estate Finance and Economics, Vol. 48, No. 1, 2014, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2362939

Velma Zahirovic-Herbert (Contact Author)

University of Georgia ( email )

Athens, GA 30602-6254
United States

Karen M Gibler

Georgia State University - Department of Real Estate ( email )

P.O. Box 4020
Atlanta, GA 30303-4020
United States

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