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The accuracy of self-reported dwelling valuation

Author

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  • Tur-Sinai, Aviad
  • Fleishman, Larisa
  • Romanov, Dmitri
Abstract
Owners’ valuations of dwelling prices are central in the construction of price indices and households’ economic behavior. We analyze the variation of the self-reported valuation bias over the distribution of dwelling sale prices, using a dataset of observations from a Household Expenditure Survey merged with the national sample of housing sale transactions by census tract. We find that self-reported estimates of dwelling values are, on average, 20% higher than the mean market prices of houses in the corresponding census tracts. Estimates reported by people who occupy dwellings in the lowest eight deciles of the price distribution are upward-biased, whereas those who live in the most expensive dwellings more typically understate the value of their homes. The self-reported valuation bias is systematically associated with owner's traits and with dwelling and neighborhood characteristics. Misspecification might be another potential explanation for that bias. The frequency of dwelling sales in the respondent's tract was found to have an effect on the self-reported valuation bias.

Suggested Citation

  • Tur-Sinai, Aviad & Fleishman, Larisa & Romanov, Dmitri, 2020. "The accuracy of self-reported dwelling valuation," Journal of Housing Economics, Elsevier, vol. 48(C).
    • Handle: RePEc:eee:jhouse:v:48:y:2020:i:c:s1051137717300463
    DOI: 10.1016/j.jhe.2019.101660
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    More about this item

    Keywords

    Sale price; Subjective asset valuation; Census tract; Hedonic price model;
    All these keywords.

    JEL classification:

    • P22 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Prices
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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