Finding an Impact of Preservation Policies: Price Effects

The impact of landmark designation on prices of the property and its neighbors sits at the core of the policy debate and empirical research on historic preservation. Yet these studies suffer from serious methodological limitations and biases. First, as important unobserved characteristics likely correlate with landmark designation, an omitted-variable bias results. Second, if designations depend on property values or neighbor-hood housing market conditions, the endogenous selection process further undermines inferences about preservation policies’effects. This article outlines more robust empir-ical strategies and presents new evidence on landmark designation effects on property values. For a sample of Chicago home sales during the 1990s, a hedonic price analy-sis suggests that landmark buildings and districts sell at a small premium. To address the omitted-variable bias, a repeat-sales approach demonstrates significant spillover effects of landmark designation on prices. These estimates are also robust to sample-selection bias and some forms of spatial autocorrelation