Learning About Housing Cost: Survey Evidence from the German House Price Boom

78 Pages Posted: 7 Jun 2021 Last revised: 14 Dec 2024

See all articles by Fabian Kindermann

Fabian Kindermann

University of Regensburg; Netspar

Monika Piazzesi

Stanford University; University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Martin Schneider

Stanford University

Julia Le Blanc

Joint Research Centre, Italy

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Date Written: June 2021

Abstract

This paper uses new household survey data to study expectation formation during the recent housing boom in Germany. The cross section of forecasts depends on only two household characteristics: location and tenure. The average household in a region responds to local conditions but underpredicts local price growth. Renters make on average higher and hence more accurate forecasts than owners, although their forecasts are more dispersed and their mean squared forecast errors are higher. A quantitative model of learning about housing cost can match these facts. It emphasizes the unique information structure of housing among asset markets: renters who do not own the asset are relatively well informed about its cash flow, since they pay for housing services that owners simply consume. Renters then make more accurate forecasts in a boom driven by an increase in rents and recovery from a financial crisis.

Suggested Citation

Kindermann, Fabian and Piazzesi, Monika and Schneider, Martin and Le Blanc, Julia, Learning About Housing Cost: Survey Evidence from the German House Price Boom (June 2021). NBER Working Paper No. w28895, Available at SSRN: https://ssrn.com/abstract=3861425

Fabian Kindermann (Contact Author)

University of Regensburg ( email )

Universitaetsstrasse 31
D-93040 Regensburg
Germany

Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Monika Piazzesi

Stanford University ( email )

Stanford, CA 94305
United States

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-834-3199 (Phone)
773-702-0458 (Fax)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
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Martin Schneider

Stanford University ( email )

Stanford, CA 94305
United States

Julia Le Blanc

Joint Research Centre, Italy ( email )

Via E. Fermi 1
I-21020 Ispra (VA)
United States

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