Preserving History or Hindering Progress: Effect of Historic Districts on Local Housing Markets
Picture an iconic Greenwich Village street.
Centuries-old cobblestone underfoot. Earth-toned homes, no more than a few stories high. Picture-perfect trees lining the sidewalk and lush ivy climbing the brownstones...
That’s no accident. One of 115 designated historic districts in New York City’s Greenwich Village feels suspended in time because of carefully designed public policies.
And while historic preservation proponents have perhaps no greater foothold than in New York City, debates have raged for decades about its relative merits. Ingrid Gould Ellen, Paulette Goddard Professor of Urban Policy and Planning, sought a better understanding of its impacts by examining historic designation on property values.
Professor Ellen found that city-wide property values increase within a historic district. But if you isolate data from Manhattan—New York City’s most densely populated borough—property values actually fall after historic designation.
These findings, Professor Ellen says, aren’t surprising if you dig a little deeper: In Manhattan, historic designation prevents property owners from redeveloping their property into, say, a 50-story high-rise that could generate substantial revenue. Manhattan property owners stand to gain the most from redeveloping their properties, so it follows that they also lose the most when they’re unable to.
On the other hand, in the outer boroughs, property owners reap all of the benefits of historic designation without the same trade-offs. The “amenity value” of living in a designated historic district is very high, but the option to develop those properties is relatively low.
Why does this matter? Professor Ellen’s research won’t put an end to the debates over historic preservation. But these findings add an additional layer to the conversation. With a more nuanced understanding, policymakers are better equipped to make always-fraught decisions around historic preservation.