Information Frictions in Real Estate Markets: Recent Evidence and Issues

Abstract

This article reviews research on the economics of information in real estate. It covers equity investment in private and public markets and intermediation by brokers. The review shows how, by examining the nature and extent of information frictions in these important markets, research has improved our understanding of potential market failures and corrections which can improve market functioning.

Keywords: Real estate, REIT, brokerage, asymmetric information, adverse selection, moral hazard, agency costs

JEL Classification: D82, D86, G14, K25, R21, R33