Persistence in Housing Wealth Perceptions: Evidence from the Census Data

Using of a unique combination of restricted-access decennial Census data and a propri-etary data set containing the details of housing transactions from several U.S. metropolitan areas, we find evidence that owner-assessed home values ”lag behind ” market prices, and that this lag has the potential to substantially alter values ascribed to local amenities using property-value hedonic techniques. We hypothesize that long-standing homeowners lack an incentive to gather recent information on housing markets, and that their ignorance is reflected in the bias in their self-reported housing values. We first demonstrate that bias in self-reported home values is significantly correlated with tenure. We then examine how tenure length affects homeowners ’ valuation of changes in a particular local amenity – ex-posure to sites on the EPA’s National Priorities List (i.e., the ”Superfund ” program). We find that recent movers report a value of a site’s deletion from that list (signaling the end of the Superfund remediation process) that is 30-50 % greater than that expressed by long-standing owners. This difference is significant and can have important implications for the results of cost-benefit analysis