The Higher Costs of Buying a Historic Home

Got your eye on a vintage house that has historical or architectural significance? It’s crucial to know what you are getting into before purchasing a historic home.

While it may seem like a worthy investment or a fantastic primary residence, the steeper expenses and stricter legal rules around an antique abode may outweigh its interior charms and unique curb appeal. 

Defining a “historic home”

A home considered “historic” isn’t one that’s simply much older than most houses for sale today. It can also be considered historically important by local, state, or national authorities.

In addition, these homes may have architectural features reflective of their era, a connection to an important bygone event or figure, or a narrative that contributes to the understanding and appreciation of nearby or national history. The residence usually needs to be a minimum of 50 years old to be recognized as a historic property, as well.

“In legal designation, historic homes are officially recognized for their historical significance by a government agency, like the National Register of Historic Places. These listings come with certain protections and restrictions, such as limitations on modifications or demolition,” says Ronan Hannan, principal of Proven Partners, a real estate consulting firm.

Attorney Winn Jackson further explains that a historic home can be situated in an officially designated historic district or may be a stand-alone historic structure or landmark based on a state or federal designation.

“Or, it could be a residence within a neighborhood that has not yet received protections afforded by local, state, or federal law but is governed according to a private property owners association or other restrictive covenant,” he says.

Case in point: Realtor John Mace says his hometown of Durango, Colorado has a street with nothing but older homes boasting historic designations. 

“Even though it’s a public street within city limits and has no homeowners association, there is a volunteer-run neighbor’s association that dictates what can be done with the home,” says Mace.

The pros of buying a historic home

There are many perks to owning a historic home, the experts agree.

“Such a home provides unique architectural character and a cherished reputation, which can potentially increase the property value more quickly than other types of homes,” says personal finance expert Andrew Lokenauth. 

Typically, the value of a historic property surpasses that of other homes in the local market by approximately 26 percent. Furthermore, a historic home tends to withstand market downturns with minimal impact.

Put another way, holding onto this older property can potentially yield significant profits.

You may also qualify for certain tax rebates or incentives by owning a historic home. Case in point: The Historic Tax Credits (HTC) program administered by the National Trust for Historic Preservation offers tax credits for the restoration of historic structures.

Moreover, you’ll feel a sense of pride in preserving the home and its heritage. You’ll likely earn respect and admiration from neighbors and citizens for taking on the responsibility of owning and maintaining a home long beloved by the community.

Jennifer Osterhout, founder of Everyday Old House, LLC, explains that historic homes are also typically located in coveted locations.

“You’ll likely be moving into an established and diverse neighborhood that evolved over decades, with an eclectic mix of architecture and people – not a boring McMansion neighborhood with cookie-cutter look-alike homes,” she says. “Old houses tend to be located closer to a town or city center, which increases the opportunity to live in a neighborhood that’s right in the thick of things. Chances are you’ll live within walking distance from a downtown area bustling with amenities like parks, schools, and locally owned shops and restaurants.”

The cons of buying a historic home

But these advantages come with major tradeoffs. The biggest is sticker shock, as most historic homes are priced much higher than comparably sized newer homes in the same community.

“Historical homes are more expensive to own because they are old,” cautions Marty Zankich, director and owner of Chamberlin Real Estate School. “While many older homes were built to last much longer than new construction properties today, they will inevitably have problems. There is much more maintenance associated with owning an older home, as well.” 

An old abode may also be energy inefficient, have a layout that’s not amenable to your family’s needs, cost more to insure, and contain older materials that will need to be replaced to prevent health risks, including asbestos and lead paint. 

“And when you own a historic home, you’re less of an occupant and more of a steward of history, which carries a responsibility,” says Mace.

More concerningly, you may not legally be allowed to remodel or upgrade a historic home to your liking.

Rules about modernizing a historic home

Indeed, if the home is on a registry of historic places or governed by a preservation society, homeowners association, or other community association, you may need permission to make improvements—permission that will likely be denied if it significantly changes the character, appearance, or charm of the structure.

“Sometimes, you are not allowed to change the façade of the home at all. In other cases, you are not permitted to tear down any part of the house. You may also need special permits and local municipal approval for work to be done,” cautions Zankich. “There are a lot more hoops to jump through than with a non-historic home.”

Hannan agrees.

“Amending a historic home is a delicate dance between modernization and preservation. The level of allowable alterations will depend on the specific designation and local regulations,” adds Hannan. “Generally, alterations should respect the existing architectural character and avoid compromising historical fabric. Modernization might be permitted for essential updates like plumbing or electrical, but often with restrictions on materials and methods used.”

Before committing to a purchase, do your due diligence.

“Hire an attorney to do the necessary research and understand what legal restrictions are placed on the structure and what legal duties of maintenance and repair might be imposed on an owner,” recommends Jackson. “Failure to comply with deed restrictions, government regulations, and any other applicable laws or rules that apply to a historic structure could lead to potentially costly, time-consuming, and emotional legal consequences.”

The costs of purchasing and owning a historic home

Curious how much you’ll need to budget if you have a historic home on your radar? Hannan advises having plenty of extra dollars for:

• Purchase price: Expect to budget 10% to 30% more for a historic home, depending on its significance, district regulations, and overall condition.
• Repair and remodeling costs: Set aside two to three times the budget for an average house due to specialized materials, skilled labor needs, and potential hidden issues. The good news is that you may qualify for loans or grants that could cover a portion of the renovation expenses. Check with your State Historic Preservation Office (SHPO) on eligibility.
• Maintenance costs: These may be 50% to 100% higher than for a non-historic home.
• Homeowners insurance: Premiums can be 15% to 50% more expensive due to age, construction materials, and potential limitations to renovations.
• Legal fees: It’s best to hire an attorney who can help navigate historic district regulations and potential approvals needed for modifications.

“Overall, try to budget 20% to 50% more to purchase, fix, and maintain a historic home than a non-historic one,” Lokenauth recommends.

What to consider before buying a historic home

When you purchase a historic home, you’re claiming a piece of history. Sustaining that history in the form of a well-kept and respectfully preserved structure will require extra funds, respect for the rules, and several compromises.

“A historic home represents an important architectural heritage, yet it requires dedication to appropriate stewardship,” says Lokenauth. “However, with the right planning and thoughtful care, owning a historic home can be a rewarding experience.”