January 29, 2015
By Robert Hulley
The market for heritage homes has taken on a new direction -- largely due to the boom in home renovations, a renewed interest in local history, and changes to the Ontario Heritage Act (OHA).
Although the process of listing and selling heritage homes is much the same as with any other type of property, there are three significant differences worth noting.
The first point is that they represent a niche market and are not for everyone. They can be expensive, unique and not easily substituted. They often have outstanding architectural features and may have historical as well as contextual significance and value. Those who do acquire heritage properties usually undertake extensive research before purchasing and, for that reason, much more information is required than is normally found on a standard listing form.
Most potential buyers want to live in a heritage home because they are attracted to its uniqueness and character. However, not all heritage homes are created equal. Their livability falls across a wide spectrum. Conditions range from homes that are almost uninhabitable to dwellings featuring the most up-to-date and advanced conveniences and refinements. In addition, some heritage districts have within them historically significant buildings that may be so special that they are only of interest to government sponsored agencies. As well, there are restoration specialists who undertake to restore heritage properties for resale. For many novices, undertaking a restoration can be challenging and expensive.
The second distinguishing factor is the need to know the market, which in many ways is common to all business activities, but heritage properties have their own particular nuances. For example, the overall heritage market contains sub-markets within it.
Heritage Conservation Districts (HCD) have the highest market orientation. The Heritage Act now enables municipalities to designate an entire town or any defined area within it as an HCD.
Typically, the HCD designation applies only to the exterior, unless the property is specifically designated under the Heritage Act. Professor Robert Shipley of the University of Waterloo studied the heritage property resale market and found that properties within Heritage Conservation Districts not only maintained their value during depressed market conditions, but also increased in value -- in excess of other house prices in active markets. This is largely because owners of properties in these districts know that they can make improvements to their homes without the possibility that a "monster" home or a contemporary home will be built next door or across the street. In addition, these owners feel comfortable with neighbours who share their views of heritage homes and jealously protect the character of the neighbourhood.
Currently, there are 115 HCDs in Ontario and nine more in the works. These districts are spread across Ontario. Toronto has the most, supporting 17 districts containing some 4,450 residential properties. Many heritage homes are also found in pockets within existing communities. Others are also found in smaller towns and villages where people are seeking a particular environment to live and work. Homes in both areas are usually less expensive because they may have incomparable property issues or they are located in smaller communities that lack urban amenities.
One can also find a scattering of stand-alone heritage properties that belonged to original farm families. With urban expansion, many have been sold and subdivided so that new houses can be built. Municipalities often require the developers to restore these buildings and put them back on the market. In many instances they are difficult to sell and remain on the market for long periods of time.
The third and final difference with heritage homes is, as mentioned, they may be subject to the provisions of the OHA. In addition, some mortgage lenders will not grant loans on the security of a heritage home. Furthermore, some insurance companies will refuse to consider insuring them. The same holds true for home inspectors, who are invariably called upon to assess and report on heritage homes. This can lead to unnecessary problems unless the inspector is "au courant" with older homes.
The real estate community has been slow to embrace the growing heritage market. But some REALTORS® have done just that and profited handsomely from their specialty. As the late James Biddle, an expert on conservation issues, wrote in Built to Last, "In more and more cities, old downtown residential neighbourhoods are the 'hot buys', not only as sound investments but also as convenient and attractive places to live".
Robert Hulley is past president of the Credit-Humber branch of the Architectural Conservancy of Ontario. He was awarded the 2014 lifetime achievement award from the conservancy for his knowledgeable advice and research, writing, photography and tours highlighting heritage issues, including his work on heritage education for REALTORS®.