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Home Price Expectations and Spending: Evidence from a Field Experiment

Author

Listed:
  • Felix Chopra

    (University of Copenhagen, CEBI)

  • Christopher Roth

    (University of Cologne, ECONtribute, MPI for Collective Goods Bonn,)

  • Johannes Wohlfart

    (University of Copenhagen, CEBI)

Abstract

We conduct a field experiment with US households to study how expectations about long-run home price growth shape spending decisions. We exogenously vary survey respondents expectations by providing different expert forecasts. Homeowners spending, measured using rich home-scanner data, is inelastic to home price expectations. By contrast, renters reduce their spending when expecting higher home price growth. These patterns reflectpositive endowment effects for owners from higher future wealth and negative income effects for both groups due to higher future housing costs. Our study highlights consequences of asset price growth and long-term expectations about the economy for household behavior

Suggested Citation

  • Felix Chopra & Christopher Roth & Johannes Wohlfart, 2023. "Home Price Expectations and Spending: Evidence from a Field Experiment," CEBI working paper series 23-03, University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI).
    • Handle: RePEc:kud:kucebi:2303
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    Cited by:

    1. Sarah Kiesl-Reiter & Melanie Lührmann & Jonathan Shaw & Joachim Winter, 2025. "The formation of subjective house price expectations: the role of perceptions and local economic conditions," IFS Working Papers W25/58, Institute for Fiscal Studies.
    2. Michael Weber & Bernardo Candia & Hassan Afrouzi & Tiziano Ropele & Rodrigo Lluberas & Serafin Frache & Brent Meyer & Saten Kumar & Yuriy Gorodnichenko & Dimitris Georgarakos & Olivier Coibion & Geoff, 2025. "Tell Me Something I Don't Already Know: Learning in Low‐ and High‐Inflation Settings," Econometrica, Econometric Society, vol. 93(1), pages 229-264, January.
    3. Alda Botelho Azevedo & Inês Gonçalves & João Pereira dos Santos, 2025. "Can’t Buy Me Home – Beliefs, Facts, and Policy in the Housing Affordability Crisis," GEE Papers 191, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Jun 2025.
    4. Steffen Altmann & Robert Mahlstedt & Malte Rattenborg & Alexander Sebald & Sonja Settele & Johannes Wohlfart, 2026. "Wage Expectations and Job Search," CESifo Working Paper Series 12420, CESifo.
    5. Sarah Kiesl-Reiter & Melanie Lührmann & Jonathan Shaw & Joachim Winter, 2024. "The Formation of Subjective House Price Expectations," Rationality and Competition Discussion Paper Series 491, CRC TRR 190 Rationality and Competition.
    6. Botelho Azevedo, Alda & Gonçalves, Inês & Pereira dos Santos, João, 2025. "Can’t Buy Me Home: Beliefs, Facts, and Policy in the Housing Affordability Crisis," IZA Discussion Papers 18073, IZA Network @ LISER.
    7. Kiesl-Reiter, Sarah, 2024. "Subjective Expectations about Joint Return Distributions," VfS Annual Conference 2024 (Berlin): Upcoming Labor Market Challenges 302423, Verein für Socialpolitik / German Economic Association.
    8. Markus Dertwinkel-Kalt & Max R. P. Grossmann, 2025. "Public Support for Environmental Regulation: When Ideology Trumps Knowledge," Papers 2503.10821, arXiv.org, revised Aug 2025.
    9. Elisa Guglielminetti & Michele Loberto, 2025. "Inflation expectations and price-setting decisions: insights from the housing market," Temi di discussione (Economic working papers) 1507, Bank of Italy, Economic Research and International Relations Area.
    10. Jessica Piccolo & Yuriy Gorodnichenko, "undated". "Homeownership and Attention to Inflation: Evidence from Information Treatments," "Marco Fanno" Working Papers 0317, Dipartimento di Scienze Economiche "Marco Fanno".

    More about this item

    Keywords

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    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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