Information Producers and Valuation: Evidence from Real Estate Markets

This paper examines valuation and its relation to information production by licensed appraisers across real estate markets. The testable implications are discussed for either a peer monitoring or a crowding out effect in the data. The empirical model is estimated with data for all 50 US states and DC covering the sample period from 1999 to 2008. While analysis is primarily cross-sectional and not causal, the evidence is consistent with theory stating that the minimum quality associated with residential licensure standards may be too low. In contrast, the evidence suggests certified residential standards afford information producers the opportunity to signal or information consumers the ability to screen based on quality