Confronting Information Asymmetries: Evidence from Real Estate Markets

45 Pages Posted: 3 Feb 2000  

Mark J. Garmaise

University of California, Los Angeles (UCLA) - Anderson School of Management

Tobias J. Moskowitz

Yale University, Yale SOM; AQR Capital; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: November 1999

Abstract

This paper studies the role of asymmetric information in commercial real estate markets in the U.S. and Canada. We propose a novel and exogenous measure of information based on the quality of property tax assessments in different regions and time periods. Employing direct and indirect information variables, we find strong evidence that information considerations are significant in real estate. We show that market participants resolve information asymmetries by purchasing nearby properties and by avoiding trades with informed professional brokers. There is some indication that purchasers also make use of informed intermediaries. The evidence that the choice of financing is used to address information concerns is mixed and fairly weak.

JEL Classification: R00

Suggested Citation

Garmaise, Mark J. and Moskowitz, Tobias J., Confronting Information Asymmetries: Evidence from Real Estate Markets (November 1999). Center for Research in Security Prices (CRSP) Working Paper No. 507. Available at SSRN: https://ssrn.com/abstract=199432 or http://dx.doi.org/10.2139/ssrn.199432

Mark J. Garmaise (Contact Author)

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

Tobias J. Moskowitz

Yale University, Yale SOM ( email )

New Haven, CT 06520
United States

HOME PAGE: http://som.yale.edu/tobias-j-moskowitz

AQR Capital ( email )

Greenwich, CT
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Paper statistics

Downloads
409
Rank
51,393
Abstract Views
2,303