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The Accuracy of Owner-Provided House Values: The 1978-1991 American Housing Survey

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  • Katherine A. Kiel
  • Jeffrey E. Zabel

Abstract

The American Housing Survey (AHS) includes the owner's valuation of the house as a measure of the house's value. If owner-stated values are accurate, the AHS (as well as other survey instruments) can be used by researchers studying a variety of topics. In this study we use the metropolitan version of the AHS for three cities over fourteen years to compare owners' valuations with sales prices of houses that sold in the twelve months prior to an interview. We find that, on average, recent buyers report house values that are 8.4% higher than the stated sales prices. Further analysis indicates that these recent buyers, when compared with owners with longer tenure, overvalue their houses by 3.3%, on average. Thus, we find that the average owner overvalues his house by 5.1%. Also, differences between sales prices and owners' valuations are not related to particular characteristics of the house, occupants (other than length of tenure), or neighborhood. Thus, the use of the owners' valuations will result in accurate estimates of house price indexes and will provide reliable estimates of the prices of house and neighborhood characteristics. Copyright American Real Estate and Urban Economics Association.

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Bibliographic Info

Article provided by American Real Estate and Urban Economics Association in its journal Real Estate Economics.

Volume (Year): 27 (1999)
Issue (Month): 2 ()
Pages: 263-298

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Handle: RePEc:bla:reesec:v:27:y:1999:i:2:p:263-298

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Cited by:
  1. Nguyen-Hoang, Phuong & Yinger, John, 2011. "The capitalization of school quality into house values: A review," Journal of Housing Economics, Elsevier, Elsevier, vol. 20(1), pages 30-48, March.
  2. Callan Windsor & Gianni La Cava & James Hansen, 2014. "Home Price Beliefs in Australia," RBA Research Discussion Papers, Reserve Bank of Australia rdp2014-04, Reserve Bank of Australia.
  3. Martijn I. Dröes & W.H.J. Hassink, 2009. "Sale price expectations and mortgage commitment: inaccuracy versus price setting behaviour," Working Papers, Utrecht School of Economics 09-24, Utrecht School of Economics.
  4. Fesselmeyer, Le Kien Eric & Ying, Seah Kiat, 2012. "Changes in the White-Black house value distribution gap from 1997 to 2005," ERES, European Real Estate Society (ERES) eres2012_167, European Real Estate Society (ERES).
  5. Thomas Hansen & Britt Slagsvold & Torbjørn Moum, 2008. "Financial Satisfaction in Old Age: A Satisfaction Paradox or a Result of Accumulated Wealth?," Social Indicators Research, Springer, Springer, vol. 89(2), pages 323-347, November.
  6. Smith, Marc T. & Murray, Margaret S. & O'Dell, William, 2003. "Estimating the Need for Single Family Rehabilitation," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, Mid-Continent Regional Science Association, vol. 33(2).
  7. Shan, Hui, 2011. "The effect of capital gains taxation on home sales: Evidence from the Taxpayer Relief Act of 1997," Journal of Public Economics, Elsevier, vol. 95(1), pages 177-188.
  8. repec:tcd:tcduee:tep051 is not listed on IDEAS
  9. Frick, Joachim R. & Grabka, Markus M. & Smeeding, Timothy M. & Tsakloglou, Panos, 2010. "Distributional Effects of Imputed Rents in Five European Countries," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 167-179.
  10. Banzhaf, H. Spencer & Farooque, Omar, 2013. "Interjurisdictional housing prices and spatial amenities: Which measures of housing prices reflect local public goods?," Regional Science and Urban Economics, Elsevier, vol. 43(4), pages 635-648.
  11. Bradford Case & Susan Wachter, 2005. "Residential real estate price indices as financial soundness indicators: methodological issues," BIS Papers chapters, in: Bank for International Settlements (ed.), Real estate indicators and financial stability, volume 21, pages 197-211 Bank for International Settlements.
  12. Einiö, Mikko & Kaustia, Markku & Puttonen, Vesa, 2008. "Price setting and the reluctance to realize losses in apartment markets," Journal of Economic Psychology, Elsevier, Elsevier, vol. 29(1), pages 19-34, February.
  13. Zabel, Jeffrey E., 2004. "The demand for housing services," Journal of Housing Economics, Elsevier, Elsevier, vol. 13(1), pages 16-35, March.
  14. Figari, Francesco & Paulus, Alari & Sutherland, Holly & Tsakloglou, Panos & Verbist, Gerlinde & Zantomio, Francesca, 2012. "Taxing Home Ownership: Distributional Effects of Including Net Imputed Rent in Taxable Income," IZA Discussion Papers 6493, Institute for the Study of Labor (IZA).
  15. Tuukka Saarimaa, 2008. "Owner-Occupied Housing and Demand for Risky Financial Assets: Some Finnish Evidence," Finnish Economic Papers, Finnish Economic Association, Finnish Economic Association, vol. 21(1), pages 22-38, Spring.
  16. Cunningham, Chris & Reed, Robert R., 2013. "Negative equity and wages," Regional Science and Urban Economics, Elsevier, vol. 43(6), pages 841-849.
  17. Harding, John P. & Miceli, Thomas J. & Sirmans, C. F., 2000. "Deficiency Judgments and Borrower Maintenance: Theory and Evidence," Journal of Housing Economics, Elsevier, Elsevier, vol. 9(4), pages 267-285, December.
  18. Ronan C. Lyons, 2013. "Inside a bubble and crash: Evidence from the valuation of amenities," Trinity Economics Papers, Trinity College Dublin, Department of Economics tep0513, Trinity College Dublin, Department of Economics.

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