Innovations in AMV are less volatile than, are weakly correlated with, and lag innovations in TMV. An AMV-based, national-level house price index has shallower troughs and shorter peaks than its TMV-based counterpart. We merge in anonymized credit bureau data to test whether homeowners use AMVs, as signals of housing wealth, to make consumption decisions. Using local mass reassessments as an instrument, we find that AMV changes causally affect the likelihood that households take out a new home equity line of credit (HELOC) with a similar economic magnitude as TMV changes. A partial equilibrium calibration exercise suggests that innovations in AMV can explain approximately 1 percent of annual HELOC origination. Overall, our results suggest that homeowners do not fully know the value of their homes.

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