Pros and Cons of Buying a Historic Home

Buying a historic home can be exciting. Some people find the idea of buying an old home appealing, especially in a historic area. Owning a historic home is like owning a piece of history. These homes are beautifully crafted and have a lot of stories to tell. That said, these homes do require a bit more love, care, and maintenance than newer homes. Before buying a historic home, ensure you understand how to find and buy the right one for you. 

This blog will help you understand the challenges and responsibilities of buying a historic home to make an informed decision about the same.

What is a Historical Home? 

While many types of houses may appeal to buyers seeking a historic aesthetic, in the United States, the designation and monitoring of historic places, including homes, is done by the National Park Service. The National Register of Historic Places, a federal list, currently encompasses over 95,000 entries. In addition, states and municipalities can designate a home or district as historic. 

What Makes a House Historic?

Age alone doesn’t bestow historical status. To be recognized as such, a home must generally be at least 50 years old (exceptions always exist) and meet at least one of the following criteria:

1. The home has a direct connection to notable historical events or periods.
2. The home has a direct connection to the lives of important historical figures.
3. The home exemplifies a particular architectural style or masterwork.
4. The home holds or has the potential to reveal significant historical information.

If you are considering purchasing a historic home, initiating the mortgage approval process early on is essential. Historic districts often feature competitive markets, so having your financing in place will give you a competitive edge when making offers.

What Are the Benefits of Buying a Historic Home?

Owning a historic home is an extraordinary adventure, intertwining the beauty of history with the comfort of modern living. It connects history enthusiasts to their community and offers them an opportunity to explore the past. Considering buying a historic home? Learn about the benefits that entice homeowners to choose these timeless properties.

1. Owning a Unique Piece of History

For a niche group of homeowners, owning a historic home is an emotional investment. These individuals, often driven by a passion for architecture or history, seek unique homes that resonate with their sensibilities. Their search for a home is guided by these passions, leading them to cherish charming features and one-of-a-kind historic structures. 

2. Joining a Community Committed to Preservation

Living in a historic neighborhood is more than just having good neighbors. It’s also about protecting and preserving the area’s special character and history. Everyone in a historic district shares this responsibility, even if it means spending more money or having fewer choices about changing their homes. 

3. Receiving a Higher Return on Your Investment

Surprisingly, many well-preserved homes in well-maintained historic districts have noticed much higher property value increases than newer homes. The difference can be attributed to several factors, including the desirability of historic neighborhoods and an upward trend in property values in areas undergoing revitalization.

4. Getting Financial Assistance for Renovations

If the cost of renovating a historic home worries you, consider exploring grants or loans available to help cover some of the expenses. You can start by checking general grants offered to first-time homebuyers. Then, contact your State Historic Preservation Office (SHPO) for assistance with historic home renovations. 

Additionally, consider the Historic Tax Credit (HTC) program offered by the National Trust for Historic Preservation that provides tax credits for rehabilitating historic buildings. You may need to investigate historic preservation easements, which can offer you substantial tax relief if applicable.

What Are the Downsides of Buying a Historic Home?

Owning a historic home can be a dream come true, but it is important to be realistic about the challenges. Some of the drawbacks of buying a historic home are:

1. Stricter Regulations

Some historic districts have less stringent rules for renovations and changes to homes. However, in many popular tourist areas, experts will carefully review your plans to ensure they fit the historic style of the neighborhood. These rules may be stricter than corresponding rules in many homeowners associations. 

If you’re considering buying a historic home, read all the rules concerning renovations before going through with your decision.

2. More Complicated Renovations

Renovating a historic home can be a lengthy affair due to additional oversight it attracts. Homeowners in historic districts need to apply for permits and reviews for any work affecting their homes’ exterior appearance. This process can add months, and sometimes even years, to the project.

For those who are not passionate about history or architecture may find the oversight of historic homes intrusive.

3. More Costly and Frequent Repairs

The use of historically authentic materials can result in expensive repairs and renovations. While the National Register of Historic Places doesn’t mandate renovations, many states and districts do. Homeowners must maintain their property as per the community standards using historically accurate materials. Unless you know the local historical building standards well, you would likely need to hire a professional for these repairs. Be sure to consider these extra costs while budgeting for a historic home.

4. Lower Return on Investment

While historic homes can be a great investment, their resale value is unpredictable. The same features that make them appealing to some homeowners can also be expensive. Homes in historic districts that are not well-preserved may be less attractive to buyers, affecting their resale value.

On the other hand, treating a historic home as a purely financial investment can be risky, as market conditions can change significantly over time. Viewing your home as a place to live rather than solely as an investment may be a wiser decision.

5. Greater Difficulty Arranging Financing and Insurance

Buying a historic home can be more challenging than buying a new home due to several reasons. For instance, scheduling an appraisal might be more difficult, and some lenders may require additional securities and guarantees before giving loans for these homes. To avoid potential loan issues at closing, securing pre-approval from a lender before making an offer on a historic home is advisable.

Tips for Buying a Historic House

Buying a historic home is similar to buying any other property but requires more research and thought. To find the right historic home for you, consider the following:

1. Explore a Variety of Homes

The more houses you visit, the better informed you will be about your preferences for architectural styles and room layouts.

2. Obtain a Pre-approval Letter

In the competitive market for historic homes, having a pre-approval letter demonstrates your financial readiness and strengthens your offer.

3. Schedule a Thorough Home Inspection

Historic properties may have hidden issues that can be costly to repair. An inspection by an experienced professional can uncover these issues and protect your investment.

4. Research Maintenance and Renovation Expenses

Historic homes often need more maintenance than newer homes. Make sure you can afford to maintain the property before purchasing it.

5. Read the Historic District’s Rules

Not all districts have the same rules, so read up on the restrictions and permissions before buying it.

The Bottom Line

Buying a historic home presents a unique blend of benefits and challenges that prospective homeowners must consider carefully. While enjoying financial advantages like the tax benefits of owning a historic home, you may face unexpected repair costs.

Before committing to a historic home, carefully analyze your priorities and willingness to invest time and resources in its preservation. If the challenges are more than the charm, consider looking at different homes.