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Wharton News
Wharton Real Estate Professor, Joseph Gyourko - Recent EngagementsJoseph Gyourko, Real Estate Department Chair and Zell/Lurie Director, was a panelist and speaker at the Liberty Property Trust Shareholders Meeting in Philadelphia in May. Also in Philadelphia, Gyourko gave the keynote address, "Thinking About the Future of Cities" at the International Council of Shopping Centers Idea Exchange in September. Later in the month he was a panelist and moderator on "American Metropolitics" for the William Penn Foundation Board Retreat.
The Steep Price of ZoningThe cover story of the Fall 2002 Regulation Magazine features an article by Joseph Gyourko and Edward Glaeser on the steep price of zoning. The article examines housing price data from across the country and reveals that, in most regions, home prices appear to be fairly close to the physical costs of construction. Only in particular areas, especially New York City and California, do housing prices diverge substantially from the costs of new construction. The bulk of the evidence suggests that zoning and other land use controls are heavily responsible for elevated prices and that measures of zoning strictness are highly correlated with high prices. For more on the price of zoning, see the Glaeser/Gyourko Working Paper #395, "The Impact of Zoning on Housing Affordability" on the Zell/Lurie website.
Professor Chris Mayer in the NewsThe October 28 edition of Fortune Magazine quoted Wharton Real Estate Professor Chris Mayer. The article commented on the continuing increase in house prices despite the economic downturn. "That is practically unheard of," said Mayer. "Housing prices always drop in recessions. They don’t hit new peaks as they did this time."Professor Mayer was also cited in an article about tax simplification that appeared in the Wall Street Journal and Deseret News (11/17/2002). Mayer was asked about the benefits of doing away with Schedule A and therefore losing the mortgage-interest deduction. "This is the one that generates the biggest political problems," said Mayer. "In principle, I think it would be a good move. But you can imagine that the transition costs would be really big." Mayer went on to say that if the mortgage - interest deduction were dropped, home prices might fall 5% to 15%. The biggest hit would occur in states like California and New York, where property values are high and many taxpayers itemize their deductions using Schedule A, rather than taking the standard deduction. The tax code is clearly encouraging people to buy places that are far bigger than they would otherwise want. But even without schedule A, homeowners would probably not owe capital-gains taxes when they sell their house and when living in their own homes, they effectively rent to themselves, but the rent is tax-free. "It will still be advantageous to own your home," continued Mayer, "but people will tend to buy later in life and they will use less debt." A Wall Street Journal front-page article on October 3 also quoted Professor Mayer. The article examined evidence that the long run-up in home prices cannot be sustained. The surge in house prices in the last few years has steadily put homeownership out of the reach of more people and is pricing first-time homebuyers out of the market in many areas of the country. These first-time homebuyers are especially important to the market. Without them, homeowners have little chance to profit on their homes and make the move-up purchases that represent the other part of the market. "If first-time buyers can’t afford houses," said Mayer, "then home prices fall." This article was also published in The Asian Wall Street Journal, 10/4/02)
Mayer on REITsProfessor Chris Mayer was in Monterey, California at the end of October where he spoke about REITs to the Berkeley Program in Finance.
Critical Acclaim for Rybczynski’s "A PERFECT HOUSE -- A Journey With the Renaissance Master Andrea Palladio"In his latest book, "The Perfect House" (Scribner, New York), Witold Rybczynksi, the Martin Meyerson Professor of Urbanism and Real Estate, and editor of the Wharton Real Estate Review gives an informative tour of Palladio's greatest legacy, the numerous country villas he built along the Brenta River in northeastern Italy. The work has already received excellent reviews and was featured in The New York Times Book Review (9/22/02) where the reviewer commented that the book is "skillfully constructed to provide depth, coverage and focus."
Marja Hoek-Smit - International Housing ExpertMarja Hoek-Smit, Director of the International Housing Finance Program and Adjunct Associate Professor of Real Estate gave the keynote address for the "Housing Washington 2002" Conference, held in Seattle in early November. Housing Washington is the main Affordable Housing Conference for the State of Washington and attracts yearly more than 700 participants. Drs. Hoek-Smit spoke about the influence of major demographic shifts and income changes on housing outcomes worldwide, the critical role of housing policies such as property rights, urban regulations, subsidies and taxation and major reforms in housing policies undertaken in other countries that might hold lessons for US affordable housing practitioners. The speech is to be aired on the State C-Span channel.While in Seattle, Hoek-Smit was interviewed by Paul Nelson, a producer of a weekly, regionally syndicated public affairs radio program, aired by several Spokane, Seattle, Tacoma and Portland radio stations on innovative housing and housing finance strategies in the US and abroad. The International Housing Finance Program conducted a specially tailored executive training program for housing and urban specialists from the Inter-American Development Bank in Washington DC. The event took place from November 3 to 6. Drs. Hoek-Smit was in Mexico in November working with the Government of Mexico on the development of new housing subsidy strategies, as part of the major housing reform agenda undertaken by the Fox administration.
PhD. Candidate, Kevin Gillen, Awarded Dissertation GrantKevin Gillen, a Ph.D. student of real estate at the Wharton School has been awarded a dissertation grant by the US Housing and Urban Development Department (HUD). This highly competitive award is a one-year grant of $15,000 to support "cutting-edge" research by PhD students in urban economics and housing policy. Gillen is researching the impact of the Section 8 housing voucher program on the Philadelphia real estate market.
Professor Susan Wachter -- Guest PresenterIn October, Wharton Professor of Real Estate and Finance, Susan Wachter, participated in a Federal Trade Commission Hearing on subprime mortgage lending, appearing on a panel entitled "Economic Perspectives on the Home Mortgage Market." Later in the month she was invited to give the Keynote Address at the International Housing Symposium for the Korean National Housing Corporation's 40th Anniversary Celebration. Wachter ended a busy month at the American Enterprise Institute, giving a presentation on Mortgage Rates and Homeownership that was televised on C-Span.
The Financial Times Quotes Professor LinnemanPeter Linneman. Albert Sussman Professor of Real Estate, and Professor of Finance, Public Policy, and Management, was quoted in an article on investing in real estate that appeared in the Financial Times (10/1). Linneman commented that private equity funds have posted 14 to 20 percent returns since 1990.
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