Familiarity Bias and Perceived Future Home Price Movements

Abstract

This study empirically confirms the existence of the status quo deviation aversion hypothesis, but not increasing status quo deviation aversion, in people who own their primary residence. The examination was conducted in the 20 Case-Shiller MSAs across the country. The results are systemic and do not vary substantially by demographic characteristics. However, variations are noted with different levels of real estate knowledge, income, purchase motive, relative home tenure, and excess relative housing risk.

Keywords: familiarity bias, behavioral real estate, status quo deviation aversion, increasing status quo deviation aversion