Landmarking Helps, Not Hurts, Property Values
It was ten years ago this month that the city’s Independent Budget Office (IBO) released the landmark study confirming what many New Yorkers intuitively knew, but the Real Estate Board of New York (REBNY) has continually sought to deny — landmarking does not negatively impact property values, and if anything, tends to modestly increase the value of property.
With the Real Estate Board of New York’s recent media blitz attacking landmarking, it’s probably more important now than ever to remember the lessons of this report, the first and only of its kind to objectively evaluate the economic effect of landmarking.
The IBO looked at residential properties in several different Brooklyn neighborhoods, comparing what happened to property values over a long period of time, from 1975 to 2002, inside and outside of historic districts. They took into account other factors such as the size of the property to ensure it was an apples-to-apples comparison. What they found provides a lesson as valuable and relevant today as it was ten years ago.
While there was no absolute, across-the-board correlation in every case, the study found that overall, houses in historic districts tended to appreciate in value at a slightly faster rate than those outside of them, and that the prices of houses inside historic districts tended to be higher than for comparable houses outside of districts.
REBNY and other landmarking opponents would have you believe that the restrictions that landmark designation places on development prohibits economic development, and that the regulation that comes with designation imposes a great burden on property owners. If this were so, you would think that it would be reflected in the sale price and value of these properties — that a historic house that you had the option of tearing down and replacing with a new, larger structure, or one that did not require landmarks review and approval for changes to the exterior, would net a higher price on the market, and be more valuable.
In fact, the study found just the opposite — that in spite of these limitations and regulations placed on these properties, their value was not only not hurt by landmark designation, but it tended to increase.
Why? Probably for the same reason that zoning, which has been around in New York since 1916, has also been a successful way of not only preserving but enhancing property values in our city.
Nearly a century ago, city leaders decided that it was not in the best interests of the public, or private property owners, to allow absolute free reign over property development. If you were going to build a house, they reasoned, you wanted to know whether or not your neighbor night be able to build a noise- and smell-producing slaughterhouse , or a light- and air-blocking skyscraper, on the property next door. Either might seriously affect your property values, and your ability to enjoy your home and benefit from the investment you made. This principle has more than borne itself out over the past century, and now most cities and many small towns, counties, and other municipalities across the country have zoning ordinances regulating what can, or cannot, get built, and where.
Landmark designation has a similar beneficial effect. Without a doubt, a certain value for a property is derived from its surroundings — owning an attractive, well-preserved historic property may have a strong appeal, but not nearly as much so as when it is surrounded by other attractive, well-preserved historic properties. Conversely, a beautiful brownstone or a lovely Victorian house, no matter its charms, may not have quite the same value or appeal with an out-of-scale or visually out-of-character neighbor looming next door. Landmark designation helps ensure this does not happen. But in a “best-of-both-worlds” twist, landmarking not only helps ensure that the private benefit of maintaining an individual’s property value is maintained, there is a great “public benefit” as well. Even if you don’t own these historic properties, you or I or anyone else gets to appreciate and benefit from the fact that these wonderful pieces of our history, that add immeasurably to the character of our city, are preserved for any of us to see and enjoy (at least from the outside). It’s the proverbial win-win.
Faced with the incontrovertible facts of the study, REBNY sought to deny their veracity; ten years later, they are still attempting to deny the benefit landmark designation has done for our city, arguing that it both stifles economic development and (somehow, paradoxically) makes our city unaffordable for poor and working-class New Yorkers.
But as this study points out, the facts are undeniable.