Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/306360 
Year of Publication: 
2024
Series/Report no.: 
SAFE Working Paper No. 432
Publisher: 
Leibniz Institute for Financial Research SAFE, Frankfurt a. M.
Abstract: 
Expectations are central for housing decisions and heterogeneity in expectations is a robust feature of survey data. We study the implications of heterogeneity in house price growth expectations for the level of house prices. We feed the joint empirical distributions of income, wealth and expectations into a calibrated heterogeneous agents housing model. We find that eliminating heterogeneity in house price growth expectations would raise average house prices and amplify house price fluctuations thereby reducing the fit of the model. Without heterogeneity, average house prices would be about 11 percent higher and the boom-bust cycle would be about 41 percent larger.
Subjects: 
Housing
survey expectations
house price cycles
life-cycle model
JEL: 
D14
D84
D31
E21
E30
G21
R21
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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