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The Charms And Headaches Of Buying A Historic Home

Victoria Araj4-minute read

March 25, 2021


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Buying a historic home can be a thrilling experience. For some exploring the possibility of buying a house, there is nothing more enticing than an old home, particularly if it’s listed on the National Register of Historic Places and is located in a historic district.

Historic homes give homeowners the chance to own a piece of history and embrace the character and stories of a beautifully crafted home. But historic homes also come with particular issues that newer homes do not. So before you commit to owning a historic home, it’s important you understand the endless care and maintenance your home will require to keep it in tiptop shape.

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What Is A Historic Home?

Although many types of houses may appeal to buyers looking for a historic look and feel, in the United States, historic places – including homes – are determined and then monitored by the National Park Service. The National Register of Historic Places is a federal list on which there are currently over 26,000 places listed. Additionally, states and municipalities can designate a home or a district as historic.

Just because a home is old does not mean it is registered or qualified to be a historic home. To be accepted as a historic property, the home needs to be at least 50 years old (although there are some exceptions) and meet one of four criteria:

  • It’s connected to significant, historical events
  • It’s connected to the lives of significant individuals
  • It’s considered an embodiment of a particular master or historic style
  • It has provided or is likely to provide important historical information

What Is A Historic District?

A historic district can be designated at the federal, state or local level. Typically, a local designation will be the most restrictive when it comes to what owners can change about their properties. A local designation typically means that a district must be preserved by all who own property within the district, and that permits are required for any work that affects the exterior of the home. Often, an individual home that is not in itself eligible to become historic due to a lack of notability or significance can gain historic protections by being part of a cluster of properties and places that are together designated as a historic district. However, some buildings within the boundaries of a historic district may be defined as “noncontributing” and escape the protections and limitations that would normally apply. 

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What Does It Mean To Own A Historic Home?

Owning a historic home is a one-of-a-kind experience that can bring lovers of history, art and architecture closer to their community and the past. If you’re thinking about purchasing a historic home, read more about the passions that motivate homeowners to buy them.

You Are In Love With Your Home

For a niche group of homeowners, a historic home is an emotional investment. Many prospective home buyers seek a unique home that they can connect with. It’s common for prospective home buyers to share a passion for architecture or history. So when these buyers look for historic homes on the market, they are guided by those passions and attracted to charming features and one-of-a-kind structures.

You’re Joining A Community Committed To Preservation

When buying a historic home in a historic district, a person is not only committing to being a good neighbor, but also a good steward of history. This is a commitment shared by other homeowners to do what it takes to preserve the character and history of the district, even when it will cost them more to do so and limit certain property rights enjoyed by non-historic home owners.

Your Home May Provide An Excellent Return On Your Investment

Believe it or not, many well-preserved homes in well-maintained historic districts have been significantly outpacing their newer home rivals in value increases.

You May Be Able To Get Financial Assistance For Renovations

If you’re interested in purchasing a historic home but are worried about the price tag, there may be grants or loans available to pay for a portion of renovation costs. After checking out general grants available to first-time home buyers, your first stop should be your State Historic Preservation Office (SHPO). They will be able to help you access state specific assistance for historic home renovation.

If you are interested in purchasing a historic home as an investment property, you should also look into the Federal Historic Preservation Tax Incentives Program, which could provide you with a 20% tax credit for rehabilitating a historic building for rental purposes.

You will also want to look into historic preservation easements, which may afford you significant tax relief if they apply.  

What Are The Downsides Of Buying A Historic Home?

While the thought of owning a historic home might seem like a dream come true, it’s important to be realistic and consider some of the headaches that may await you if you were to purchase a historic home.

You’re Joining A Very Motivated Association Of Stakeholders

In some historic districts, oversight is minimal. However, in many very strict or tourism-heavy districts, the process will be closely reviewed for architectural compatibility and historic sensitivity by experts in the field. Restrictions may be even stricter than those of many homeowners associations.

If you’re a serious prospective historic home buyer, be sure to read all applicable historic preservation regulations before purchasing the historic home.

Renovations Will Take Longer 

Added levels of oversight invariably add months, and sometimes years, to any construction or home improvement project. In addition, homeowners in historic districts are required to apply for review or permits of any work that affects the exterior appearance of the home, including additions, demolitions and alterations.

Those who buy a historic home without the passion for history or architecture may find the historic oversight intrusive.

Renovations May Cost More And May Need To Be More Frequent 

Some requirements, like the use of historically authentic materials, can add significantly to the costs of these products. Although the National Register of Historic Places does not require any renovation or upkeep of historic homes, many state and local districts do, so homeowners must maintain their property to community standards with historically accurate materials.

Your Home May Not Turn Out To Be A Good Financial Investment

Unfortunately, the return on a historic home investment is unclear. The same qualities that some homeowners find onerous or unduly costly are also the ones that protect resale value. Districts or homes that are not well-preserved will not be as attractive to those interested in purchasing a historic home, and resale value will reflect that.

However, there is some debate about whether treating a home as an investment makes sense in the first place, as it is almost always difficult to time the market and sell on demand. It may be wiser to view your home as a cost-effective way to live more comfortably. 

You May Have More Difficulty Arranging Financing And Insurance 

It is possible that prospective historic home buyers could run into some difficulties during the home buying process. For example, it could be harder to schedule an appraisal – and sometimes lenders shy away from historic homes altogether. Because renovations on historic properties can be so costly, many insurance companies will be hesitant to offer homeowners policies.

Luckily, there are insurance companies that specialize in historic homes, but, as with everything else historic, it’ll cost more.

The Bottom Line: Charm, At A Cost

There are many benefits and drawbacks involved with the purchase of a historic home. For example, you can save money in the form of tax breaks, but older homes can often surprise you with emergency repairs. You will need to determine what owning a piece of history is worth to you. If the time and investment required aren’t something you’re comfortable with, it’s best to make that decision before you invest anything. As you continue your home buying journey, feel free to explore more tips in the Learning Center.

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Victoria Araj

Victoria Araj is a Section Editor for Rocket Mortgage and held roles in mortgage banking, public relations and more in her 15+ years with the company. She holds a bachelor’s degree in journalism with an emphasis in political science from Michigan State University, and a master’s degree in public administration from the University of Michigan.