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Individual Experience and Home Price Expectations

Published online by Cambridge University Press:  26 February 2025

Shuai Fang Open the ORCID record for Shuai Fang [Opens in a new window] ,
Xiaolong Liu  and
Arno J. van der Vlist
Shuai Fang*
Affiliation:
Soochow University, Business School
Xiaolong Liu
Affiliation:
University of Groningen, Department of Economic Geography, Real Estate Centre xiaolong.liu@rug.nl
Arno J. van der Vlist
Affiliation:
University of Groningen, Department of Economic Geography, Real Estate Centre and Amsterdam School of Real Estate a.j.van.der.vlist@rug.nl
*
shuaifang@suda.edu.cn (corresponding author)
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Abstract

We examine whether the heterogeneity of expectations is associated with idiosyncratic variations in experience. Combining household survey data and administrative data from the Netherlands, we find that given market development, households’ expectations about house price changes vary with their individual experience. This association is related to the use of information conveyed by experience, which varies in terms of informativeness, recency, and household sophistication. Finally, we find that individual experience also explains how far house price expectations deviate from realized house prices and that it may affect household behavior. Our findings elucidate the role that individual experience plays in expectation formation.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , First View , pp. 1 - 27
Copyright
© The Author(s), 2025. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

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Footnotes

We are grateful to the CentERpanel; Statistics Netherlands; the Netherlands’ Cadastre, Land Registry, and Mapping Agency; and the Dutch Association of Realtors for allowing us to access their data. We thank an anonymous referee and the editor for their valuable comments. We acknowledge financial support from the Ministry of the Interior and Kingdom Relations of the Netherlands (Grant 2019-95742). All errors are our own.

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