Housing Market Expectations

37 Pages Posted: 4 Apr 2022 Last revised: 14 Apr 2023

See all articles by Theresa Kuchler

Theresa Kuchler

New York University (NYU)

Monika Piazzesi

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

Johannes Stroebel

New York University (NYU) - Leonard N. Stern School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 3 versions of this paper

Date Written: April 2022

Abstract

We review the recent literature on the determinants and effects of housing market expectations. We begin by providing an overview of existing surveys that elicit housing market expectations, and discuss how those surveys may be expanded in the future. We then document a number of facts about time-series and cross-sectional patterns of housing market expectations in these survey data, before summarizing research that has studied how individuals form these expectations. Housing market expectations are strongly influenced by recently observed house price changes, by personally or locally observed house price changes, by house price changes observed in a person's social network, and by current home ownership status. Similarly, experienced house price volatility affects expectations uncertainty. We also summarize recent work that documents how differences in housing market expectations translate into differences in individuals’ housing market behaviors, including their home purchasing and mortgage financing decisions. Finally, we highlight research on how expectations affect aggregate outcomes in the housing market.

Suggested Citation

Kuchler, Theresa and Piazzesi, Monika and Stroebel, Johannes, Housing Market Expectations (April 2022). NBER Working Paper No. w29909, Available at SSRN: https://ssrn.com/abstract=4074292

Theresa Kuchler (Contact Author)

New York University (NYU) ( email )

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Monika Piazzesi

Stanford University ( email )

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University of Chicago - Booth School of Business ( email )

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National Bureau of Economic Research (NBER) ( email )

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Johannes Stroebel

New York University (NYU) - Leonard N. Stern School of Business ( email )

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National Bureau of Economic Research (NBER) ( email )

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Centre for Economic Policy Research (CEPR) ( email )

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