Architectural Review Boards and Their Impact on Property Price
and Time on Market
Architectural Review Boards and Their Impact on Property Price and Time on Market
Abstract
This paper investigates for the impact of privately-administered Architectural Review Boards on property price and marketing time and, thus, their financial efficacy. Additionally, the paper demonstrates the usefulness of two-stage least squares regression as a modeling technique to better capture the simultaneous determination of property price and property marketing time. Robust results across two-stage least squares estimations and more traditional employed hedonic and hazard model estimations, show that properties subject to Architectural Review Board oversight experience a significantly higher selling price and a simultaneous reduction in marketing span, ceteris paribus.
Introduction
Architectural Review Boards are employed to create and maintain consistency and quality in the housing stock. Traditionally, architectural review has been held at the municipal level and has been employed for the protection of particular areas of a town or city. The protected area was typically an historic district (or other area of interest) designated at the local, state, or federal level. More recently, however, architectural review is increasingly delegated to the community or neighborhood level for protection of areas not designated as historic districts. In these situations, ultimate enforcement remains vested with the governing municipality through lawsuits on behalf of the private Architectural Review Board or its sponsoring entity. Original construction, as well as significant future alterations, must be vetted and pre-approved by the Board. In this manner, property is maintained at a consistently acceptable quality.
Given that community members experience both actual and opportunity costs from Board operations, there must be some economic logic supporting the existence of Architectural…