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Housing Market Expectations

Author

Listed:
  • Theresa Kuchler
  • Monika Piazzesi
  • Johannes Stroebel

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

  • Theresa Kuchler & Monika Piazzesi & Johannes Stroebel, 2022. "Housing Market Expectations," NBER Working Papers 29909, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:29909
    Note: AP CF EFG IO ME PE
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    Cited by:

    1. McQuinn, Kieran & O'Toole, Conor & O'Shea, Dónal, 2024. "Quarterly Economic Commentary, Winter 2024," Forecasting Report, Economic and Social Research Institute (ESRI), number QEC2024WIN, March.
    2. Charles Ka Yui LEUNG, 2022. "Housing and Macroeconomics," ISER Discussion Paper 1197, Institute of Social and Economic Research, The University of Osaka.
    3. Bhatt, Vipul & Kishor, N. Kundan, 2022. "Role of credit and expectations in house price dynamics," Finance Research Letters, Elsevier, vol. 50(C).
    4. Low, Hamish & Sánchez-Marcos, Virginia, 2024. "Labour supply and the cost of house price booms and busts," Labour Economics, Elsevier, vol. 90(C).
    5. Joris Wauters & Zivile Zekaite & Garo Garabedian, 2024. "Owner-occupied housing costs, policy communication, and inflation expectations," Working Paper Research 449, National Bank of Belgium.
    6. Federica Ciocchetta & Elisa Guglielminetti & Alessandro Mistretta, 2024. "What Drives House Prices in Europe?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 86(5), pages 1089-1121, October.
    7. Herbst, Tobias & Kuhn, Moritz & Saidi, Farzad, 2024. "Army of Mortgagors: Long-Run Evidence on Credit Externalities and the Housing Market," CEPR Discussion Papers 18942, C.E.P.R. Discussion Papers.
    8. Verma, Akhilesh Kumar & McQuinn, Kieran, 2024. "Assessing expectations of European house prices," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI).
    9. Denis Gorea & Oleksiy Kryvtsov & Marianna Kudlyak, 2022. "House Price Responses to Monetary Policy Surprises: Evidence from the U.S. Listings Data," Working Paper Series 2022-16, Federal Reserve Bank of San Francisco.
    10. Krivenko, Pavel, 2023. "The Role of Moving Shocks, Unemployment, and Policy in Understanding Housing Bust," Journal of Banking & Finance, Elsevier, vol. 154(C).

    More about this item

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • G50 - Financial Economics - - Household Finance - - - General
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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