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 2020 NOeG Young Economist Award and the 2021 IARIW Nancy and Richard Ruggles Memorial Prize.


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, 2019] [LISER, Luxembourg, 2019] [Vienna University of Economics and Business, Podersdorf, Austria, 2019] [University of Strathclyde, Glasgow, UK, 2020] [NOeG Conference, Austria, 2020] [The Johannes Kepler University Linz, Austria, 2020] [The University of Melbourne, Australia, 2020] [University of Bonn, 2020][12th Real Estate Markets and Capital Markets (ReCapNet) Conference at ZEW Mannheim, Germany, 2020][AREUEA-ASSA, Chicago, 2021][European Central Bank, 2021][36th General Conference of the International Association for Research in Income and Wealth (IARIW), 2021]

Media Coverage: Lëtzebuerger Gemengen