Tracking Owners’ Sentiments: Subjective Home Values, Expectations and House Price Dynamics

Anthony Lepinteur
University of Luxembourg

Sofie R. Waltl
Luxembourg Institute of Socio-Economic Research & Vienna University of Economics and Business

The paper was awarded the NOeG Young Economist Award 2020 (best paper presented at the NOeG 2020 Conference by economists below 35).


Economic theory predicts that expectations on future house price growth are related to the current price. We test this relationship for the supply side of the secondary housing market using micro data linking individual expectations to subjective owner-estimatedvalues (OEV). We perform convergent validity tests and conclude that the ”wisdom of
the home-owner crowd” is sufficient to study even objective house price dynamics. We find convincing evidence that optimistic expectations indeed imply higher OEVs as compared to neutral or pessimistic expectations. Results are qualitatively and quantitatively consistent for Italy and the US as well as for booming and gloomy years.

JEL.: C43; D9; G4; R31

Keywords: Housing Markets; Expectations; Heterogeneous Beliefs; Subjective Data; Convergent Validity

Working Paper: Lepinteur, A., and Waltl, S. R. (2021), Tracking owners’ sentiments: Subjective home values, expectations and house price dynamics, LISER Working Papers No. 2021-02.

Presentations: [International Conference on Real Estate Statistics, Eurostat, Luxembourg, February 2019] [LISER, Luxembourg, April 2019] [Vienna University of Economics and Business, Podersdorf, Austria, May 2019] [University of Strathclyde, Glasgow, UK, February 2020] [NOeG Conference, Austria, February 2020] [The Johannes Kepler University Linz, Austria, April 2020] [The University of Melbourne, Australia, May 2020] [University of Bonn, July 2020][12th Real Estate Markets and Capital Markets (ReCapNet) Conference at ZEW Mannheim, Germany, November 2020][AREUEA-ASSA, Chicago, January 2021]

Media Coverage: Lëtzebuerger Gemengen