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- Title
Self-Reported vs. Market Estimated House Values: Are Homeowners Misinformed or Are They Purposely Misreporting?
- Authors
Choi, Jung Hyun; Painter, Gary
- Abstract
Extant research finds significant gaps between a homeowner's self-reported house value and market estimates, and that the gap is largest for underwater homeowners. Prior studies, however, have largely overlooked the possibility that homeowners' self-reported house value may be more accurate due to private information. Previous research has also neglected the possibility that there could be discordance between what homeowners know and what they report as their house value. Using the Panel Study of Income Dynamics, this study examines how the choices of households reveal their knowledge of the true home value. In so doing, we find that that post move housing choices reveal that market estimates are accurate assessments of the housing value. Further, we find evidence that these underwater homeowners are aware of the actual house value, but are reporting them incorrectly. The results show that misreporting underwater homeowners are as likely to be late on their mortgage payments as homeowners that are reporting negative equity. Underwater homeowners' reluctance to admit their losses accords with the theory of loss aversion.
- Subjects
HOME ownership; HOME prices; HOMEOWNERS; HOUSING market; VALUATION of real property
- Publication
Real Estate Economics, 2018, Vol 46, Issue 2, p487
- ISSN
1080-8620
- Publication type
Article
- DOI
10.1111/1540-6229.12199