Updated: March 3, 2023

Today’s historically significant homes can be extremely attractive investments for buyers who want to own a piece of history in a cherished statement home, complete with unique elements of the past. Historic homes are also often situated in well-maintained historic districts that can further boost market valuations.

We’ve gathered the most important tradeoffs to ponder when considering purchasing a historic home. A key part of your due diligence is determining if a specific historic home, in a specific community, will be a good match for both your finances and lifestyle.

Many of these issues are also applicable for those considering purchasing an older home that may not be designated as historic.

Table of Contents

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What is a Historic Home?

Not all older homes can be considered historic properties. Few homes receive the coveted historic designation, as the home must meet one of the following criteria to quality:

  • Played a significant role in a historical event
  • Been the home of a person in history, who exhibited meaningful contributions to the country, or
  • Been designed by a prominent architect

In many jurisdictions, historic homes must be at least 50 years old and must be preserved with their period architectural characteristics intact. In other words, a 75-year-old home that has been modernized, to meet the demands of technological living, probably would not qualify for historic status.

The main objective behind the “historic” designation is to retain the history and integrity of the era, complete with design, architecture, materials and workmanship, which serve to document the period in which the building was constructed. Historic districts also strive to have historic homes “harmoniously show” in tandem.

Historic District Neighborhood

Local preservation societies, city councils and historic commissions all play a key role in determining if a particular home meets the criteria for historic registration and are specific in their demands for not compromising historic authenticity.

Local preservation boards, such as the St. Paul Heritage Preservation Commission, can categorize homes within a historic district as either Contributing or Non-Contributing:

  • Contributing Homes: Houses which are contributing to the historic significance of a given district in either architectural terms, or by being a place of important historic record, for homes lacking architectural significance
  • Non-Contributing Homes: Houses that are not contemporary for the given historic architectural period, or are dissimilar in size, style or materials

Henry John Klutho Residence Historic Plaque Jacksonville Florida

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Stats and Trends for Historic Homes in the United States

  • The National Historic Preservation Act of 1966 created the National Register of Historic Places, the official list of US historic places deemed worthy of preservation
  • There are currently more than 2,300 historic districts across the United States
  • Charleston, South Carolina is cited as having created the country’s first local preservation society in 1920, which later helped the nation’s first historic zoning ordinance to pass in 1931
  • Among US cities, St. Augustine, Florida has both the highest number of historic homes at 11,231, as well as the highest percentage of historic homes at 21.93%
  • New York has the oldest median home age of states in the U.S. at 63 years (source: House Method)
  • Clay County, Kansas has the oldest median home age of counties in the U.S. at 79 years (source: House Method)
  • 39 states have tax incentive programs related to the restoration of historic homes
  • The federal Historic Rehabilitation Tax Credit (HTC) offers a tax credit of up to 20% for qualifying historical project costs
  • Approximately 50% of all HTC projects cost less than $1 million (source: HUD)
  • Approximately 25% of all HTC projects cost less than $250,000 (source: HUD)
  • 42,293 HTC projects were completed from 1977 to 2016, an average of over 1,000 projects per year (source: HUD)
  • The cost of restoring historic buildings and homes has greatly increased as the number of skilled craftsmen and artisans has dwindled
  • New technologies will help prevent premature demolition of historic structures
  • New technologies, such as 3D printing, are providing more cost-effective options for quality and safe restorations
  • The costs and limits of historical materials make restoration very challenging without innovative approaches and options
  • Both the federal government and local governments can designate an area a historic district, but local designations have the most restrictions, since local authorities control zoning and building codes
  • Historic district designation is typically associated with higher property values
  • In Indianapolis, between 2002 and 2016, a single-family house in a local historic district has on average increased in value 7.3% each year, compared with just under 3.5% for houses not in historic districts (source: PlaceEconomics)
  • Between 2000 and 2008, single-family homes in Raleigh, NC increased in value 49% on a per square foot basis. Over that same time period, properties in three local historic districts increased in value between 84% and 111%. (source: PlaceEconomics)
  • The growing popularity of Cheap Old Houses (Instagram & HGTV series) is an indication that a younger population of consumers are becoming aware and interested in older properties for a variety of reasons: house flipping; affordable housing; restorations; design; bargain hunting; and learning about architectural history.

Historic Victorian House

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Benefits of Owning a Historic Home

Though admittedly there are many risks with owning a historical home, there are many benefits and incentives that make owning a historic home a smart investment:

  • Historic homes can generate significant tax savings, from restoration costs, as well as reduced recurring property taxes
  • Historic homes are typically prestigious sources of local pride and often found in highly desirable neighborhoods
  • Historic homes are often located in historic districts that have been revitalized for both residential and commercial usage
  • Historic homes in historic districts can draw higher valuations due to the inherent long-term stability ensured by managing
  • Historic homes stand as testaments of past superb craftsmanship, architectural styles, and vintage materials that are no longer in mass production
  • Buyers, and existing owners, may qualify for grants, loans, and/or tax credits that can help cover the home purchase and, if necessary, the cost of restoring your new home
  • There are a wide range of financing options for both mortgages and restoration projects, including: Grants; Loans; Rebates; Tax Incentives (Local, State, Federal); Preservation Easement Programs; Certified Local Government (CLG) Funds; and Awards & Prizes
  • Local communities have incentive to help homeowners maintain the exterior conditions of their historic homes and may offer grants for repairing and improving exteriors, such as repointing mortar, replacing siding, and painting
  • If in a historic district, your neighborhood could receive special perks from the city, such as more police protection, restricted car traffic, or preferred parking privileges to residents
  • Owning and preserving a historic home is inherently a green and sustainable practice, as it extends the life of existing building materials, especially mature wood
  • Historic neighborhoods are, on average, more walkable and bikeable

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Historic Neighborhood with Brick Row Houses


Disadvantages of Owning a Historic Home

The biggest disadvantage of owning a historic home is getting into an unanticipated situation that is not a good fit for your lifestyle, aesthetic tastes, or financial circumstances:

  • You will have less freedom on how you can manage, repair, upgrade and use your home
  • You will encounter more safety risks due to older, weakened infrastructure and unknown wear-and-tear
  • Repairs and upgrades are more costly, take longer, and require more approvals
  • Many repairs and upgrades require highly in-demand specialists
  • You will have fewer options on how you can repair and upgrade your home
  • Your home may attract unscheduled, unwanted visitors (AKA“looky-loos”)
  • Your local historic society may require that you open your home to the public for an annual tour, in lieu of receiving tax benefits
  • You may desire modern amenities that are not permitted or plausible
  • The reduced ways that a historic property can be used can lessen demand and lower sale prices
  • Overzealous historic designations can be used as a political weapon to curtail economic development and innovative methods of city planning, including introducing affordable housing (i.e. “quality of space” politicking)

Another disadvantage to keep in mind is that the age of a property can have a negative impact on homeowners insurance rates. Understandably, older homes in poor structural shape present a higher risk of accidents and injuries than do newer homes in better condition. As part of your due diligence, be sure to research high-risk homeowners insurance to check if this type of policy may be applicable to any prospective older or historic home.

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The Ideal Traits of Someone Buying a Historic Home

The ideal traits of someone considering purchasing, restoring and, ultimately, living in a historically significant home include:

  • Has ample wealth and financial reserves to cover any necessary restorations adequately
  • Has sufficient time and patience to manage restoration projects correctly and thoroughly
  • Has a secondary residence to live in during the entirety of a major restoration
  • Has healthy relationships with local expert contractors and architects, or has trustworthy referrals
  • Possesses genuine affinity with the local community and historical interest groups to be a happy and involved steward of the property for years to come

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What to do Prior to Making an Offer on a Historic Home

Prior to making an offer on a historic home, it is imperative to address the following items thoroughly:

  • Consult a local real estate agent who is highly experienced and knowledgeable about historic properties in the given market
  • Find a highly reputable and experienced home inspector who specializes in historic properties in your given market
  • Seek confirmation with the governing architectural board on any important questions you may have regarding potential upgrades, especially pertaining to the kitchen, bathrooms, and modern amenities
  • Seek out neighbors to understand how they perceive the tradeoffs of living in a historic home and/or the given historic district
  • Conduct financial analysis on projected tax savings, while confirming what the requirements are to qualify for recurring tax benefits
  • Research average budgets and schedules for comparable properties and projects to set realistic expectations
  • After your research, determine if you have encountered any “red flag deal breakers”, such as:
    • The post-purchase restoration budget is beyond your financial means
    • Required repairs will take too long for the home to become livable
    • You are unwilling to forgo certain prohibited upgrades or features, such as modern appliances, modern bathrooms, modern lighting, etc.
    • You deem the local historical board and/or HOA will be too oppressive or controlling for your lifestyle
    • The requirements to meet recurring tax credits are not worth the commitment
    • There are too many uncertainties on the condition of the home and how much the minimum restorations may cost or how long they may take

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How to Find Old and Historic Homes for Sale

For leading real estate listing sites, like Zillow and Redfin, you can filter on older and historic homes by using a combination of the following filters:

  • Max year built: putting a year value in this field will return homes that were built on or before this date
  • Keywords: you can also add terms such as “historic” or “nation register” to help discover properties that may have a historic designation

Maryland Heritage Properties Historic Farmhouse

The easiest way to discover older and historic residential properties is to browse the following real estate sites that specializes in older home inventory. Oldhouse.com has an especially helpful search page that list numerous pre-set filters based on very narrow criteria, such as 37 different architectural styles and 30 old house features.

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Closing Comments

We do not have a hard set opinion on whether purchasing and living in a historic home and district is a wise investment or smart lifestyle choice. Our stance is that homebuyers need to perform thorough due diligence to understand what the obligation and restrictions are, and if they think it is a good fit for their needs and preferences. In other words, this comes down to personal choice.

To help you get a sense of what may be best for your current situation, we recommend weighing the pros and cons, as they compare in two distinct preferred lifestyle buckets:

  • A preference for: Long-Term Stability, Neighborhood Involvement, and Higher Standard of Living
  • A preference and need for: Flexibility, Independence and Privacy

As a general rule, we advocate that homeowners have as much flexibility as possible throughout the expected lifespan of their homes. The concept of “flexibility” encompasses the property lot, the uses of the home, the interior and exterior design of the house, property tax protection, and the local governing boards and rules. That said, a historic home would not be a good fit for our lifestyle, as we would not want to restrict our future options unnecessarily.

However, we do recognize and respect that living in a historic home, especially when situated in a well-managed historic district, can offer many attractive benefits. The most significant benefit is that historic districts will ensure that the neighborhood will be stable and well-maintained for many years to come.

Additionally, historic neighborhoods will consist of like-minded citizens that will be vested and engaged in their communities that, on average, will improve the quality of life, as well as valuations. Old Town Alexandria, located in Virginia across the Potomac from Washington, D.C., is just one example of how a “historic renaissance” has attracted a highly affluent, educated, and engaged base of residents, while upgrading a large base of aged residential properties, in the process.

Lastly, keep in mind that it is possible to find a home and community that combines the best of both lifestyles. These are self-managed attractive neighborhoods with older homes that have been well-maintained, without the red tape of historic design review boards. Rising home prices and valuations provide incentive for residents to maintain the character of the neighborhood that has made it so desirable.


Historic Home Resources


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