Learning about Housing Cost: Survey Evidence from the German House Price Boom

Fabian Kindermann, Julia Le Blanc, Monika Piazzesi and Martin Schneider

No 28895, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper uses new household survey data to study expectation formation during the recent housing boom in Germany. The cross section of forecasts depends on only two household characteristics: location and tenure. The average household in a region responds to local conditions but underpredicts local price growth. Renters make on average higher and hence more accurate forecasts than owners, although their forecasts are more dispersed and their mean squared forecast errors are higher. A quantitative model of learning about housing cost can match these facts. It emphasizes the unique information structure of housing among asset markets: renters who do not own the asset are relatively well informed about its cash flow, since they pay for housing services that owners simply consume. Renters then make more accurate forecasts in a boom driven by an increase in rents and recovery from a financial crisis.

JEL-codes: E0 G0 R0 (search for similar items in EconPapers)
Date: 2021-06
New Economics Papers: this item is included in nep-eur, nep-mac and nep-ure
Note: AP EFG ME
References: Add references at CitEc
Citations: View citations in EconPapers (23)

Downloads: (external link)
http://www.nber.org/papers/w28895.pdf (application/pdf)

Related works:
Working Paper: Learning about Housing Cost: Survey Evidence from the German House Price Boom (2021)
Working Paper: Learning about Housing Cost: Survey Evidence from the German House Price Boom (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:28895

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w28895

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().