Historic preservation is commonly used to protect old buildings and neighborhoods from deterioration. In 1981, the City of Milwaukee established a historic preservation commission to develop and maintain a local register of places with historical importance to the area. The commission also reviews all applications for historic status as well as any requests for exterior alterations. As such, there are numerous rules and restrictions that are imposed on property owners once it has been declared a historic site. Thus, while historic designation can serve to internalize the externalities in neighborhoods with historic buildings, it also imposes costs on homeowners who wish to make improvements to their homes. This paper uses a hedonic model to estimate the impact of historic preservation on the sale price of a single family home in the Milwaukee area. Preliminary results show that the impact of historic preservation is positive when it is significant, with the average impact at 26.6%. However, there was significant variation between districts, with the impact significantly positive in 13 of 22 districts used in the sample. Specifically, the positive impact ranged between 11% and 65%, holding other factors constant. None of the 22 districts had a negative and significant impact. An evaluation of spillover effects reveal that just over one third of them displayed positive and significant spillover effects, whereas 21% had negative and significant spillover effects. The remainder were insignificant. An important question is what factors influence this variability in historic preservation effects. The eventual goal of this research is to extend our preliminary analysis to two stages using a recently developed method that employs spatial econometric methods to solve the unique identification problems inherent in hedonic models (Carruthers and Clark, forthcoming in Journal of Regional Science). This will permit us to determine the specific factors that influence these premiums. While the spatial estimates presented in this preliminary work do not permit a two-stage model, we did explore whether implicit prices appear to be correlated with the household income and racial makeup of the neighborhoods in which they are located. The findings show little evidence that the implicit values of historic districts are correlated, but the implicit price associated with historic district spillovers was positively correlated with both neighborhood measures.