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Wharton News
Real Estate Bubbles - Just a Lot of Hot Air?Real Estate Professor Chris Mayer was quoted in an article in the Wall Street Journal (2/5/03) about talk of a real-estate bubble and the risk to home-buyers. Home prices relative to income aren’t much higher than they were in the 1980s but some markets appear to be richly valued, including Boston, New York, Washington and San Francisco. If you are moving to one of those cities, should you rent for two years while waiting for prices to decline? "Most people are not in a position where they can time the market," said Mayer. "There are big costs in doing so." The longer you stay in a house, the more you will benefit from the ability to live rent-free and the less you need to worry about short-term price dips. "Over seven or eight years, you can be pretty sure that buying a house will financially dominate renting."
Big Mortgage? Buy More BondsYour home loan isn’t just a financial stretch. It’s really a short position in the fixed-income market. Wharton Professor Chris Mayer, in an article in Forbes Magazine (3/17/03), said that the mortgage on your house is an important factor when deciding how much of your portfolio should be invested in bonds. When taking out a fixed-rate mortgage for $400,000 you’re taking out the equivalent of a $400,000 short position in bonds. If you have a big mortgage, consider holding more bonds than you otherwise would as a hedge against the short position represented by your mortgage.
Marja Hoek-Smit - Main Speaker at World Bank ConferenceDrs. Marja Hoek-Smit was the main speaker and leader of the section on "The Financing of Social Housing" during the World Bank's Conference on Housing Finance for Emerging Economies, held at the Washington Headquarters of the World Bank from March 10-13. Hoek-Smit, Douglas Diamond and Claude Taffin, the head of the French social housing agency, discussed the rationale for subsidizing housing, guidelines for the design of efficient and equitable housing subsidies that least distort markets, and pros and cons of frequently used finance-linked housing subsidies for both ownership and rental housing.Drs. Hoek-Smit is Director of the highly acclaimed Executive Education International Housing Finance Program, and its next program will take place in June. Worldwide, this is the only program that addresses the need for objective and analytical education in housing finance by providing an intensive period of education in policy-innovations, and the institutional, financial, and managerial aspects of housing finance.
Real Estate Center GIS Lab Tracks Effects of City Tax and ZoningThe Philadelphia Inquirer (2/3/03) featured an article on the work of the Geographic Information Systems (GIS) lab. Wharton Ph.D. candidate Kevin Gillen explained the ongoing projects at the lab, which is directed by Wharton professor, Susan Wachter. Gillen described the maps and data that have already shed light on the effects of city tax, zoning policies and other factors influencing real estate markets in Philadelphia. According to Gillen, Kensington has shown the biggest percentage gain in average home values. University City was the worst-performing area of Philadelphia in 1994, but has recovered dramatically and was in second place in 2002. The lab also tracks the Philadelphia real estate market in terms of its riskiness as perceived by the marketplace. The charts show that Philadelphia homeowners and real estate investors still demand a fairly high "risk premium" relative to that of the rest of the country
A New Opportunity for Real Estate Graduates and Neighborhood Revitalization ProfessionalsA new program to educate leaders who will transform and revitalize neighborhoods and cities has been established through a unique partnership between the urban development industry, the University of Pennsylvania and the John S. and James Knight Foundation. Wharton Real Estate Professor Susan Wachter is an advisor for the program, CUREx, which aims to place 10 highly-motivated individuals each year as CURE Fellows who will divide their time between education and practical experience for two years. The fellows will be placed in organizations working on large-scale development that affects neighborhoods. Development companies who are interested in participating as a host company or graduate students who would like to know more about applying for this program should call (215) 898 7631
Rybczynski - International AgendaWitold Rybczynski was invited to speak at the New Global History and the City Conference, organized by the Kennan Institutes of the Woodrow Wilson International Center for Scholars. The meeting took place at the European University in St. Petersburg, Russia, in January. Rybczyinski’s feature article on the effects of global tourism on cities, "Why We Are All Venetians Now," appeared in the Financial Times (January 25/26, 2003). His latest book, "The Perfect House," was published in the UK; the Sunday Times called it "an unaffected and charming account of one man's journey around Palladio's villas."
Asuka Nakahara Speaks to Young Presidents OrganizationZell/Lurie Real Estate Center Associate Director, Asuka Nakahara, gave a talk to the Young Presidents Organization (YPO) in Philadelphia in April. The talk focused in part on the transition from participating in the real estate industry on the "for-profit" side to the classroom/teaching, "not-for-profit" side at Wharton.
Peter Linneman - Demanding Conference ScheduleWharton real estate professor, Peter Linneman presented his annual economic overview entitled "What’s Going On?" to the Trammell Crow Market Watch 2003 in New Orleans on March 20-21. In early April Linneman moderated two panels at the New York University Real Estate Institute. "The Next Five Years - Opportunities and Pitfalls" and "The Bigger is Better Bubble - Is It Bursting?" His busy April schedule continues with the GMAC Multifamily Affordable Housing Conference in Beaver Creek where Linneman will be the keynote speaker. He then travels to Washington for the ULI flagship program, "The Washington Real Estate Trends Conference" at the Ronald Reagan International Trade Center where he will be the Keynote Speaker and a Moderator of the "Economists Panel". He will then remain in Washington as a speaker at The Real Estate Roundtable Spring Meeting. His talk is entitled "Real Estate Markets - Up Close."
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