Housing Supply Elasticity: Proxy for Exogenous House Price Movements
The idea is that all else equal, areas with inelastic housing supply (e.g., areas that are surrounded by water, so you can't just build some more houses "over that way") will see greater house price growth, which increases household wealth, and that these differences in supply elasticity are exogenous and uncorrelated with other things that matter. In Saiz (2010), he uses terrain and water data to determine the degree to which the housing supply in different metropolitan areas is constrained by geographic features.

It's a method that really only works (to the extent that it does) when house prices are rising, which would induce housing construction. If house prices are falling, supply elasticity tends to be pretty low— we don't tend to bulldoze homes at a particularly high rate.

With respect to the degree to which house price changes are anticipated, I think the best work on expectations is that done by Case and Shiller over the years, most recently Case, Shiller, and Thompson (2012).