Download or read book Liquidity and Information Asymmetry in the Real Estate Market written by Siu Kei Wong and published by . This book was released on 2015 with total page 21 pages. Available in PDF, EPUB and Kindle. Book excerpt: George Akerlof's asymmetric information theory explains why lemons are rarely, if at all, transacted. We extend his theory to explain liquidity in the second-hand real estate market. The idea is to decompose real estate asset into two components: Land and the building structure. While sellers may know more about the quality of their structure, information on land, predominantly its locational attributes, is generally much more transparent. Without assuming any credit constraints or loss aversion behaviour, our model shows that 1) real estate liquidity depends on the relative importance of land and building value; 2) there is a positive relationship between real estate prices and trading volume when land value is more volatile than building value; 3) the positive relationship is stronger when most of the property value comes from the structure; and 4) while sales of new development may pull away the demand from second-hand real estate, such a substitution effect is weaker when the land price is high. These four implications have been confirmed with panel data analysis using Hong Kong's housing transactions over the period 1992-2008 across 50 districts.

Download or read book Information Asymmetry as an Impediment to Market Liquidity in Township Residential Property Markets written by Mxolisi Motau and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Housing is currently a topical issue in South Africa which has a housing backlog estimated to exceed 2,5 million households. Banks are a critical component of the housing value chain. They have been struggling to facilitate the reduction of the backlog, citing a lack of market liquidity of townships relative to the suburbs as a primary reason for the failure to reduce the backlog. The aim of this research study is to determine the extent to which information asymmetry is a factor in the liquidity of the township property market, with a view to understanding the impediments to liquidity in the township real estate market, and make recommendations for parsimonious interventions. Quantitative analysis was performed by examining data obtained on Estate Agents, Properties Registered and Demographics. Descriptive statistics were employed to understand the structure of the market. Thereafter factor analysis was used to identify relationships and narrow the number of variables for further exploration. Finally, multiple regression was applied in order to understand how the variables identified interacted with one another. The findings revealed that estate agents and the type of housing product had a direct impact on market liquidity. Market liquidity in the township market could be improved by making practical and parsimonious interventions centred on the estate agents, and property developers.

Download or read book Information Asymmetries Financial Constraints and Institutional Investment written by Dragana Cvijanovic and published by . This book was released on 2019 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper we analyze the underlying economic mechanisms that might be driving the observed patterns in commercial real estate prices, as an interplay between buyer and seller characteristics (in terms of their size, capital constraints and market knowledge), and the timing and geographical location of these transactions. By jointly modelling the institutional investors' decision to invest in a particular real estate market and the effect of such decision on real estate prices and probability of sale, we find that, controlling for property-, and time-varying location specific-, as well as investor characteristics: largest buyers (sellers) tend to pay (sell for) a price premium for the otherwise identical property at the time of purchase (sale), relative to smallest buyers (sellers). Keeping investor size and investor financing constraints constant, more informed sellers tend to sell at a premium, while more informed buyers tend to buy at a discount. Furthermore, more informed sellers (buyers) are more likely to sell (buy), providing support to the argument that reduction in information asymmetry has a positive effect on asset liquidity. These results point to a significant role of private valuations and investor market informedness in commercial real estate markets, when financing choice is taken into account.

Download or read book Inside and Outside Liquidity written by Bengt Holmstrom and published by MIT Press. This book was released on 2013-01-11 with total page 263 pages. Available in PDF, EPUB and Kindle. Book excerpt: Two leading economists develop a theory explaining the demand for and supply of liquid assets. Why do financial institutions, industrial companies, and households hold low-yielding money balances, Treasury bills, and other liquid assets? When and to what extent can the state and international financial markets make up for a shortage of liquid assets, allowing agents to save and share risk more effectively? These questions are at the center of all financial crises, including the current global one. In Inside and Outside Liquidity, leading economists Bengt Holmström and Jean Tirole offer an original, unified perspective on these questions. In a slight, but important, departure from the standard theory of finance, they show how imperfect pledgeability of corporate income leads to a demand for as well as a shortage of liquidity with interesting implications for the pricing of assets, investment decisions, and liquidity management. The government has an active role to play in improving risk-sharing between consumers with limited commitment power and firms dealing with the high costs of potential liquidity shortages. In this perspective, private risk-sharing is always imperfect and may lead to financial crises that can be alleviated through government interventions.

Download or read book Volatility and Liquidity in the Real Estate Market written by Xin He and published by . This book was released on 2018 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: Empirical evidence suggests that when the market becomes increasingly volatile, trading activities may be depressed or even halted. We develop a simple model to formally study the relationship between market volatility and asset liquidity in the real estate market. It is shown that an increase in market volatility negatively affects asset liquidity when information is asymmetric between the market participants. Based on this result we propose a new theory for the brokerage function at the bargaining stage of real estate trading, namely, whether the brokers' role is to facilitate or hinder trading hinges on whether their involvement serves to mitigate or exacerbate the problem of information asymmetry between the buyers and sellers. The result is also used to offer theoretical explanations for some empirical findings in the literature.

Download or read book Liquidity and Pricing Biases in the Real Estate Market written by Zhenguo Lin and published by . This book was released on 2004 with total page 118 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Market Distortions when Agents are Better Informed written by Steven D. Levitt and published by . This book was released on 2005 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Agents are often better informed than the clients who hire them and may exploit this informational advantage. Real-estate agents, who know much more about the housing market than the typical homeowner, are one example. Because real estate agents receive only a small share of the incremental profit when a house sells for a higher value, there is an incentive for them to convince their clients to sell their houses too cheaply and too quickly. We test these predictions by comparing home sales in which real estate agents are hired by others to sell a home to instances in which a real estate agent sells his or her own home. In the former case, the agent has distorted incentives; in the latter case, the agent wants to pursue the first-best. Consistent with the theory, we find homes owned by real estate agents sell for about 3.7 percent more than other houses and stay on the market about 9.5 days longer, even after controlling for a wide range of housing characteristics. Situations in which the agent's informational advantage is larger lead to even greater distortions"--National Bureau of Economic Research web site.

Download or read book Proceedings of the 20th International Symposium on Advancement of Construction Management and Real Estate written by Yuzhe Wu and published by Springer. This book was released on 2016-05-27 with total page 1311 pages. Available in PDF, EPUB and Kindle. Book excerpt: These conference proceedings offer an outstanding resource for academics and professionals, sharing essential findings on the latest developments in real estate and construction management. The subject is “Advancement of Construction Management and Real Estate” in the context of new-type urbanization. The Chinese Research Institute of Construction Management (CRIOCM), working in close collaboration with Zhejiang University, organized CRIOCM2015, the 20th International Symposium. Written by academics and professionals from all over the world, these proceedings discuss the latest achievements, research outputs and advances between frontier disciplines in the field of construction management and real estate. They cover a wide range of topics, including new-type urbanization, land development and land use, urban development and management, the real estate market and housing policies. The discussions will provide an important reference source on the implementation of new-type urbanization in China and abroad.

Download or read book Liquidity Creation and Financial Fragility written by Christian Weistroffer and published by Logos Verlag Berlin GmbH. This book was released on 2010 with total page 124 pages. Available in PDF, EPUB and Kindle. Book excerpt: Open-end real estate funds (OEREFs) are the predominant vehicle in Germany for channeling private capital flows into commercial real estate markets. They transform longer-term investment projects into daily redeemable claims. To the extent that OEREFs stand ready to both issue new shares and redeem outstanding ones on a daily basis they provide valuable liquidity transformation. At the same time, they become susceptible to run phenomena. This dissertation analyzes the inherent fragility of open-end real estate funds in light of the German open-end fund crisis of 2005/06. The dissertation comprises three papers. The first paper explores how fund performance and other factors influenced capital flows into OEREFs before, during and after the German open-end fund crisis of 2005/06. The second paper looks at the valuation practice of OEREFs and assesses whether funds have suffered from a valuation problem. It finds evidence in support of the view that systematic deviations of appraised values from prices achieved in the market were at the heart of the 2005/06 German open-end fund crisis. The third paper relates findings from banking theory to OEREFs. It explores under which conditions the open-end fund contract resembles a demand deposit contract that is prone not only to panics but also to fundamental runs. The dissertation concludes by discussing policy options to mitigate the run problem.

Download or read book Remedies to Informational Asymmetries in Stock Markets written by Peter-Jan Engelen and published by Intersentia nv. This book was released on 2005 with total page 4 pages. Available in PDF, EPUB and Kindle. Book excerpt: Like many other markets, stock markets are characterised by asymmetric information. If investors cannot distinguish high-quality from low-quality securities, they will value all securities as average resulting in the well known market for lemons. This decreases the allocative efficiency and social welfare by guiding resources to the least good investment opportunities. How can high-quality listed companies communicate with stock markets to distinguish themselves from low-quality listed companies? Although proponents of mandatory disclosure rules in securities markets will answer this question with far-reaching governmental regulation, it is jumping to conclusions and skipping devices that signal the true quality of the investment opportunities to the stock market. This book analyses the functioning of stock markets, in particular the dissemination of price-sensitive information on these markets. In order to evaluate the legal rules governing the dissemination of information from an economic perspective, an operational framework is needed to assess the current disclosure regulation with respect to allocative efficiency. The book replaces vague legal goals of securities regulation, such as investors' protection, by financial economic concepts, such as market efficiency and market liquidity. To enhance allocative efficiency, the book analyses the relevancy of mandatory disclosure rules, the use of trading halts in disseminating information during the opening hours of a stock exchange, the use of selective disclosure and the regulation of insider trading.

Download or read book Effects of Information Asymmetry on Market Liquidity written by Richard Co and published by . This book was released on 2000 with total page 172 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Testing for Information Asymmetries in Real Estate Markets written by Pablo Kurlat and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We study equilibrium outcomes in markets with asymmetric information about asset values among both buyers and sellers. In residential real estate markets hard-to-observe neighborhood characteristics are a key source of information heterogeneity: sellers are usually better informed about neighborhood values than buyers, but there are some sellers and some buyers that are better informed than their peers. We propose a new theoretical framework for analyzing such markets with many heterogeneous assets and differentially informed agents. Consistent with the predictions from this framework, we find that changes in the seller composition towards (i) more informed sellers and (ii) sellers with a larger supply elasticity predict subsequent house-price declines and demographic changes in that neighborhood. This effect is larger for houses whose value depends more on neighborhood characteristics, and smaller for houses bought by more informed buyers. Our findings suggest that home owners have superior information about important neighborhood characteristics, and exploit this information to time local market movements.

Download or read book Market Liquidity Risk written by Andria van der Merwe and published by Springer. This book was released on 2016-01-12 with total page 310 pages. Available in PDF, EPUB and Kindle. Book excerpt: Andria van der Merwe provides a thorough guide to the critical tools needed to navigate liquidity markets and value security pricing in the presence of market frictions and information asymmetries. This is essential reading for anyone with a current or future interest in liquidity models, market structures, and trading mechanisms.

Download or read book Confronting Information Asymmetries written by Mark J. Garmaise and published by . This book was released on 2002 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies the role of asymmetric information in commercial real estate markets in the U.S. We propose a novel and exogenous measure of information based on the quality of property tax assessments in different regions. Employing direct and indirect information variables, we find strong evidence that information considerations are significant in this market. We show that market participants resolve information asymmetries by purchasing nearby properties, trading properties with long income histories, and avoiding transactions with informed professional brokers. The evidence that the choice of financing is used to address information concerns is mixed and weak

Download or read book The New Era of Real Estate written by Gianluca Mattarocci and published by Springer Nature. This book was released on 2022-10-22 with total page 147 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is intended to guide researchers interested in the world of innovation in real estate finance linked to technology and provide new evidence on classifying and evaluating the performance of PropTech companies. Chapters will deal with the evolution of PropTech, possible business models, negotiation and property management tools, new property financing tools (p2p lending and crowdfunding), the market and the balance sheet analysis of PropTech companies in Europe. A valuable resource for researchers studying the real estate industry, this book is also relevant to those studying FinTech and the impact of technology on industry more broadly. It can also be of use to professionals in the real estate industry, looking for a cutting edge research-based study on PropTech.

Download or read book Market Liquidity written by Thierry Foucault and published by Oxford University Press. This book was released on 2023 with total page 531 pages. Available in PDF, EPUB and Kindle. Book excerpt: "The process by which securities are traded is very different from the idealized picture of a frictionless and self-equilibrating market offered by the typical finance textbook. This book offers a more accurate and authoritative take on this process. The book starts from the assumption that not everyone is present at all times simultaneously on the market, and that participants have quite diverse information about the security's fundamentals. As a result, the order flow is a complex mix of information and noise, and a consensus price only emerges gradually over time as the trading process evolves and the participants interpret the actions of other traders. Thus, a security's actual transaction price may deviate from its fundamental value, as it would be assessed by a fully informed set of investors. The book takes these deviations seriously, and explains why and how they emerge in the trading process and are eventually eliminated. The authors draw on a vast body of theoretical insights and empirical findings on security price formation that have come to form a well-defined field within financial economics known as "market microstructure." Focusing on liquidity and price discovery, the book analyzes the tension between the two, pointing out that when price-relevant information reaches the market through trading pressure rather than through a public announcement, liquidity may suffer. It also confronts many striking phenomena in securities markets and uses the analytical tools and empirical methods of market microstructure to understand them. These include issues such as why liquidity changes over time and differs across securities, why large trades move prices up or down, and why these price changes are subsequently reversed, and why we observe temporary deviations from asset fair values"--

Download or read book The Rise of New Brokerages and the Restructuring of Real Estate Value Chain written by Shusong Ba and published by Springer. This book was released on 2018-04-26 with total page 191 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book elaborates on the six pillars of a healthy and standardized real-estate brokerage industry: the generation, distribution and matching of information; the transaction system; circulation finance; mobile Internet; the supervision system; and professional brokers. With each of these pillars playing a role, they also mutually interact to constitute an integrated framework that regulates the brokerage industry. Presenting practicable, extensive and cutting-edge research that encompasses various areas of the industry and detailed case studies from around the globe, the book provides a number of suggestions that have already been adopted and have begun to take effect. It also explores the frontiers of the real-estate brokerage industry – the incorporation of the internet, the blurred boundary between online and offline service where brokerages are moving online, client acquisition is via the internet, and benchmark companies are focusing more on their trading service capacity, each building their own controllable trading environment.