In 1995 the state historic preservation office of South Carolina sponsored an authoritative economic study of house prices to address this very point. Among the most striking findings: homes located in two nationally and locally designated historic districts increased in price at a rate almost 25 percent faster than did homes in the community at large.
John A. Kilpatrick, a lecturer with the Center for Real Estate and Urban Economic studies at the University of South Carolina College of Business, coordinated the project in cooperation with Susan McGahee and the late Nancy Meriwether of the Historical Services Division, South Carolina Department of Archives and History. Columbia, S.C., a city with a population of just over 100,000 was selected as the subject area because of its proximity to the university and to the state historic preservation office, which provided work space for interns from the university’s graduate program in applied history.
In establishing the scope of the study, key concerns were the reliability and the validity of the data. Unlike similar studies conducted elsewhere in the United States, which used property value estimates from such sources as tax assessment records or building permits, the Columbia study used actual sales transactions to establish market values. Since one criterion for the validity of such a study is the collection of a statistically meaningful amount of data, Kilpatrick opted to utilize actual transaction figures over a period of about 12 years from early 1983 to mid 1995.
Fortunately, USC’s Center for Real Estate has a history of working with the Columbia Multiple Listing Service, a private corporation to which most residential real estate companies subscribe and which serves as a repository for residential sales data throughout the Columbia market. The student interns collected sales data on every home within the historic districts that had sold at least twice during the study period. Using these transaction prices and times between sales, Kilpatrick developed an index of house price appreciation within the historic districts. Using market-wide sales data, he also constructed an index of price increases for the market as a whole.
Analysis of the data led Kilpatrick to conclude that, for the “two residential historic districts in Columbia…investigated for price appreciation characteristics relative to surrounding properties of the period 1983 – 1995… (and) utilizing a repeat sales methodology applied against actual transaction prices of historic properties, it appears that historic properties have an average rate of return higher than (that of) the Columbia market as a whole.”
To verify the Columbia findings, Kilpatrick and the state historic preservation office have now begun a study working with similar Multiple Listing Service data in Beaufort, S.C., a coastal town of roughly 15,000 people. Located in a quasi-resort area, Beaufort has both a large historic district and considerable new construction in the surrounding area. Given the mix of property types and the data available in Beaufort, Kilpatrick believes that this study will also begin the process of developing a useful appraisal methodology. The results of the second study should be available in the Spring of 1997.
In the meantime, the Columbia study has already proved useful to preservationists. The findings were presented at the annual conference of the Georgia Trust for Historic Preservation in February.
They have been included in a training workshop for real estate appraisers. And the state historic preservation office plans to use this information in a training program for local historic preservation commissioners that will be broadcast by satellite throughout South Carolina.
Tom Shaw is the local assistance coordinator in the Historical Services Division, South Carolina Department of Archives and History. For more information, or to obtain a copy of “House Price Implications of Historic District Designations” by John A Kilpatrick, contact: