Like oil and water, speculation and historic preservation don’t mix

When Billiards owner Phil Spudich recently called it quits after more than 30 years in business, he cited the smoking ban, telling local reporters he had “nothing to sell.”

Nothing, that is, but a vintage downtown building he can probably sell for a high six-figure price.

Prohibition Columbia-style may have bounced Billiards, but another Columbia trend — “preservation speculation” — has bounced the price of historic property toward historic highs.

To Preserve and Protect
A speculation hallmark — rapidly accelerating prices in the absence of large buyer pools — emerged downtown after the area’s hip re-christening as The District. Prices really took off after a few wealthy patrons paid a premium to preserve and protect.

But the preservation speculation that spread into historic residential neighborhoods has been less kind to buyers and sellers. Facing higher interest rates and daunting renovations, many buyers have bypassed high-priced homes older than 50 years, leaving them unsold and empty at levels that alarm even longtime residents.

“I’ve never seen so many old homes for sale and so many just sitting,” a University of Missouri-Columbia journalism professor and Old Southwest resident recently told me. “It used to be you could put a sign in your yard here and sell your house in a day, regardless of how the rest of the market was doing.”

The notion that buyers will pay more for an asset than it is worth inflated the stock market before busting the dot-com boom. This type of speculation also drove the tulip frenzy, the Gilded Age and the Roaring ‘20s, first up — then into the ground.

Locally, speculation that a historic home worth $250,000 three years ago is now worth $450,000 — based on few credible market measures — has trapped many sellers in a shopworn downward spiral.

It’s also left too many old houses vacant. One local speculator with three historic homes has had two of them empty for more than two years. His advertised prices have bounced around by as much as $100,000, and on any given day, he’s willing to rent the homes, sell them, renovate them or leave them “as is.”

Another person bought a historic home at last year’s market high but needed to sell a few months later. Now, an auction looms that may cost tens of thousands of dollars in lost market value.

History’s High Price
What’s driving these distressing stories of overpriced homes and lagging sales?

Ironically, putting a high price on history often starts with the exorbitant cost of preserving it.

For properties with a history of renovation and maintenance, the first thing a buyer often hears from a seller is, “I’ve got this much into it, so I need to get this much out of it.”

“This much” often means a whole lot of dough.

Exacerbating the cost of historic preservation in Boone County is a lack of local tax incentives that defies a national trend. In Alabama, Arizona and California, for instance, historic properties are assessed at a 50 percent reduced rate. Georgia and Illinois freeze property taxes on historic homes for 10 years, all in exchange for guarantees that owners will maintain them. So it goes for dozens of other states, counties, and municipalities.

Local Realtors also share some of the blame. They should better educate buyers about the upkeep that historic properties require and better emphasize that sellers should factor in necessary maintenance or rehabilitation costs in their asking prices.

Fail to fix a property old enough to be called “historic” and its value immediately falls. Price the property too high and you impair a buyer’s ability to preserve and enjoy it.

A Piece of the Pie

Owning and preserving a historic property is a sacrifice — financially, physically and emotionally. Buyers should understand what they’re undertaking; sellers should consider the ongoing cost of their home’s good health; and Realtors should educate.

With historic preservation widely considered a public good, local governments should also provide tax incentives to those willing to do the heavy lifting.

For a city that wants to preserve its past, speculation and greed are big threats. Everyone wants a bigger piece of a pie that they just aren’t making anymore.

As Mom used to say, go ahead — eat all that pie now.

But when it’s gone, it’s gone.