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The Real Economics of Preservation

The Real Economics of Preservation

I get lots of questions about the economics of preservation. What’s real and what’s white noise. While I’m not an economist or even remotely math-centric, a big reason why I do what I do is because of the economic reality that historic preservation is good for our communities.

Historic preservation improves property values, helps with density, is beneficial to the environment, as well as a myriad of other benefits to both residents and local governments.

I’m going to throw a lot of studies and statistics at you today, so bookmark this page and use it as ammunition when the city or some developer starts shouting at you about how historic preservation is terrible for the local economy.

How Do I Know?

I recently had the opportunity of sitting in at a lecture by Donovan Rypkema at the Winter Park Colloquium on Historic Preservation. Mr. Rypkema is one of the greatest real estate, economics, and historic preservation minds of our time.

His firm, PlaceEconomics, has served clients like the US State Dept, National Trust For Historic Preservation, The World Bank, United Nations Development Program, and HUD as well as conducting studies in 49 of 50 states (get on board, Nevada!) and 45 countries around the globe.

His book The Economics of Historic Preservation: A Community Leader’s Guide is a brilliant treatise on the true economic impacts of historic preservation. Bottom line, when Donovan Rypkema speaks about the economics of historic preservation, the major world players stop what they are doing and listen closely. Here’s what he had to share.

Property Values

Probably the biggest myth in real estate today is that historic preservation hurts property values. In the battle over the economics of preservation, this seems to be the biggest sticking point. No matter how many studies have proved the opposite, this continues be promoted by developers and local politicians as to why your town shouldn’t have more historic districts.

IT IS A LIE! There is no way from any data other than the ones taken from La-La Land that any respectable economist, developer, or politician can back up this fallacy. Just ask them to provide any evidence of this and they will fail miserably.

Here’s the facts from some of Mr. Rypkema’s studies on property values and historic districts.

  • Housing Values in Savannah, GA between 1999-2014:
    • Cutler-Brownsville historic district: increased ~160%
    • Mid-City historic district: increased ~170%
    • Savannah historic district: increased ~195%
    • Victorian historic district: increased ~250%
    • All other non-historic Savannah real estate: increased ~108%
  • Housing Values in Pittsburgh, PA between 2001-2014:
    • Non-historic Pittsburgh neighborhoods saw an approximately 45% increase in value
    • The 9 local historic districts increased in value from between 65% in Murray Hill Avenue to 220% in East Carson Street district.
  • Housing Values in San Antonio, TX between 1998-2013:
    • Non-historic neighborhoods increased in value approximately 70%
    • Local historic districts increased in value approximately 140%
  • Housing values in Philadelphia, PA showed a 14.3% price premium in National Register Districts and a 22.5% premium in local historic districts over those homes NOT located in a historic district.
  • The Journal of Urbanism Volume 1 Issue 1 in 2008 concluded that homes located in local historic districts appreciated 21% faster and commanded a premium of $59,000 to $67,000.

Historic districts clearly increase property values, which is good for homeowners, but how does that affect the city coffers?

  • In Little Rock, AR property values in historic districts commanded an average price premium of $31,000 which equated to $40,000 more revenue for the county, $50,000 more  revenue for the city, and $200,000 more revenue for schools!

Properties located in historic districts maintain their value better and increase in value faster than similar properties not in historic districts.


The other argument you’ll hear all the time from developers and local politicians is that we need to tear down old neighborhoods and build high density housing in our downton areas to increase density.

Density is seen as beneficial to city finances because there are more people paying property taxes per square mile. And while density is a boon to cities, they may be misguided on how to best increase density.

  • In Manhattan, NY density per square mile was as follows:
    • 80,739 Non-historic residential areas
    • 104,750 Skycrapers
    • 144,835 Historic districts

So, even when they tear down old buildings in New York City to build huge new skyscrapers, the city looses density. This study was echoed in several other studies showing the same results.

Conclusion: Historic districts contribute to higher density.


This argument is the most heinous to me and without a doubt, the biggest fallacy. Tearing down older historic buildings to infill with new “energy-efficient” housing is possibly the biggest lie perpetrated on citizens.

A study was done in Salt Lake City, UT regarding historic homes and their impact on the environment. The amount of raw materials that were used or disposed were calculated for the three scenarios below, and the results were astounding.

  • Rehabilitating a neglected single family home required 47.3 tons of materials
  • Construction of new suburban housing required 182.4 tons of materials
  • Demolition of existing historic home and infill of new “energy efficient” home required 351.8 tons of materials

That’s 7.5 times more raw materials and energy required to tear down and replace an old house with infill construction! There is nothing beneficial about tossing that much material into the landfill.

The conclusion from several of Mr Rypkema’s studies was this:

“The average historic house that was retained rather than razed, reduced the impact on the landfill by 116.6 tons.”

That makes sense, but what about the relative inefficiency of older buildings. Well, that’s something Mayor Bloomberg commissioned a study in New York City about. He wanted to make New York one of the greenest cities in the country and set about trying to find where the major energy use was occurring. What they found surprised them greatly.

It turns out that a multifamily structure built after 1980 uses 13% more energy per square foot than one built before 1920.

Building design, siting, passive heating and cooling devices like operable windows, better building materials, all these things played a part in making the historic building more energy-efficient than the newer buildings.

The Conclusion

Yes, there will still be some who stick their heads in the sand and refuse to see the truth about the economics of preservation, but the facts speak for themselves. Historic buildings are better for our community’s economy, your personal economy, and the environment than new construction.

But, the financial issue is such a small part of why we need to keep our old buildings. Yes, it makes good financial sense, but our history is so much more than just numbers on a page. These houses are our only connection to our past, to who we were as a society.

As the National Trust for Historic Preservation says, This Place Matters! They all matter more than you know, and understanding the financial aspects of why they matter makes the historic preservation movement that much stronger.

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3 thoughts on “The Real Economics of Preservation

  1. Thanks for the blog and your considerable effort putting it together. I am restoring an 1880s farm house and have been doing so for over 4 years. Fortunately the house is on the property where I live here in Pennsylvania and not occupied so I don’t have to live with the mess and can walk away for a while when it becomes more of a job than a (semi retirement) hobby. I have preserved the plaster, sanded the painted wood floors, removed 40 year old ceiling tile and re-plastered etc. I would like to get your thoughts on one change that I am making though. The baseboards, window and door trim, etc, were pretty beat up in all but one room. I have cut some walnut and oak trees from the property and had them kiln dried and milled into 6 inch baseboards and 5 inch trim to replace the old painted pine. The downstairs will be walnut base, trim and crown and the upstairs the same in oak. I’m also paneling the kitchen in tongue and groove hickory. Was removing and replacing the old 7 inch base and 5 inch pine trim with new unpainted high quality wood a bad idea?

  2. Thanks for the article and your commitment to preservation. I enjoy your articles. Have there been studies done in the more “suburban” metropolitan areas or mid-sized towns? Historic districts are not equal in terms of housing stock. Are some more successful at maintaining value over others and what contributes to these differences? Sadly, my house in the historic district in our community of 40,000 has just now gotten back to its 1998 value in the last year. There are definitely historic neighborhoods in our community without historic district designation that have seen greater increases. I believe this has to do as much with the politics of real estate and social perception as much as anything. From talking with realtors, it sounds like things are at least finally on the upswing. Depressed property values have made it hard to attract people who want to invest in historic properties leading to more property deterioration. All of this makes me question my sanity. With families and younger people from out of state moving into our historic district neighborhoods, I am starting to see a light in the property value darkness. Again, thanks for the preservation-mindedness.

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