Abstract
House price expectations are not directly observable. This article demonstrates two methods for measuring household price expectations: survey data and economic theory. We show that survey measures do not provide good or unbiased forecasts of house price information. In contrast, information from the household Euler equation implies that in the aggregate, households behave optimally given realised future prices. At the national level, house price expectations appear to be formed rationally. As an illustrative example, pricing errors during the recent boom indicate that exuberant price expectations cannot account for the boom in house prices.
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