Home price beliefs: Evidence from Australia

Windsor, Callan; Cava, Gianni La; Hansen, James

doi:10.1016/j.jhe.2015.05.002

Cited by 12 publications

(9 citation statements)

References 26 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…This demonstrates that the market discovers what the hedonic model does not, namely, key omitted variables. In fact, using the ask price, which reflects the seller's knowledge of the unit (Benitez‐Silva et al., ; Windsor et al., ), we find the same phenomenon. Moreover, there is little sign of persistence when we consider a repeated cross‐section model in which we control for time‐invariant unit fixed effects.…”

Section: Introductionsupporting

confidence: 70%

Testing for Micro‐efficiency in the Housing Market

Anundsen¹,

Larsen

2018

Int Economic Review

View full text Add to dashboard Cite

Using highly granular transaction‐level data for the Norwegian housing market over the period 2002–2014, we investigate whether excessive prices persist or revert in repeat sales. Excessiveness in prices is detected by comparing selling prices to predicted prices implied by a hedonic model, which includes a rich set of attributes. Persistence is rejected and there is substantial reversion in excessive prices. Our results also show little scope for profitable arbitrage by investing in apparently underpriced units. We suggest that excessive prices are related to the stochastic arrival of interested purchasers at public showings, which we show is nonrepeatable.

show abstract

Section: Introductionsupporting

confidence: 70%

Testing for Micro‐efficiency in the Housing Market

Anundsen¹,

Larsen

2018

Int Economic Review

View full text Add to dashboard Cite

show abstract

“…To determine the accuracy of self‐reported house values, a comparative measure of market value is required. Multiple measures have been used to determine market value including appraised values (Kain and Quigley , Agarwal ), sale prices (Goodman and Ittner , Kiel and Zabel , Melser ), the average house price in a homeowner's census tract (Romanov, Fleishman and Tur‐Sinai ) and hedonically adjusted sales prices in the same postal code (Windsor, La Cava and Hansen ). In the latter two cases, it is difficult to argue that all house characteristics have been accounted for, thus the comparisons are likely inaccurate.…”

Section: Literature On Self‐assessment Of Home Valuesmentioning

confidence: 99%

“…Windsor, La Cava and Hansen (2015) use Australian post code averages rather than microdata to conclude that households in areas with relatively high home value selfassessment errors tend to spend more and have greater total debt, controlling for age, income, unemployment rates, tenure in home and education level.…”

mentioning

confidence: 99%

The Accuracy of Senior Households’ Estimates of Home Values: Application to the Reverse Mortgage Decision

Haurin

Moulton

Shi

2017

Real Estate Economics

View full text Add to dashboard Cite

Using a unique data set of more than 14,000 senior homeowners in the United States, this study compares self‐assessed home values to arm's length contemporaneous appraisals. In a sample of seniors who received counseling for a reverse mortgage, the absolute value of the assessment error averages 18.9% of appraised value and it is biased upwards by 13.4%. When adjusted to reflect the general population of seniors, the size and bias of the average error fall to 16.1% and 4.2%. Both the bias and the size of the error tend to be lower for households with higher income and credit scores but it is greater for black households. In our sample period of 2009–2011, house prices were falling. The greater the rate of price reduction, the greater is the upward bias and size of the assessment error. When seniors who applied for a reverse mortgage learn that they overvalued their home, their probability of closing the loan falls.

show abstract

“…Motivated by the worldwide housing market collapse, there is some recent literature on the question whether households have an accurate perception of the value of their house, notably Benítez‐Silva et al () and Henriques () for the United States and Windsor, La Cava, and Hansen () for Australia. However, the notion that homeowners misestimate house prices is not new (Agarwal ).…”

Section: Discussionmentioning

confidence: 99%

The Rose‐Tinted Spectacles of Homeowners

Cruijsen¹,

Jansen²,

Rooij³

2016

Journal of Consumer Affairs

View full text Add to dashboard Cite

Based on annual household surveys between 2011 and 2014 and additional evidence from a customized survey in 2013, we document that a sizable group of homeowners in the Netherlands has a rosy picture of the value of their house. Even homeowners who are arguably well informed tend to overestimate the value of their house. Multivariate regression analyses suggest that this overestimation is positively related to the mortgage loan-to-value ratio and the tenure of the owner-occupier. Moreover, homeowners tend to overestimate the value of the house when the actual value falls below the purchase price of the house. We discuss rational interpretations of these findings as well as psychological explanations such as loss aversion or an endowment effect.

show abstract

Home price beliefs: Evidence from Australia

Cited by 12 publications

References 26 publications

Testing for Micro‐efficiency in the Housing Market

Testing for Micro‐efficiency in the Housing Market

The Accuracy of Senior Households’ Estimates of Home Values: Application to the Reverse Mortgage Decision

The Rose‐Tinted Spectacles of Homeowners

Contact Info

Product

Resources

About