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Wharton News MBA candidate wins Society of Industrial and Office Realtors scholarship
Marcus Lackey, MBA Candidate, Class of 2009, received the $10,000 scholarship from the Society of Industrial and Office Realtors. There were 35 applicants, 12 semi-finalists (who participated in a phone interview) and six recipients. "Given the state of the real estate markets," says Marcus, "this is a very nice surprise." Congratulations to Marcus from the Zell/Lurie Center! More money for schools increases home values, finds Ferreira
Fernando Ferreira presented "The Value of School Facilities: Evidence from a Dynamic Regression Discontinuity Design" in the following schools/conferences this semester: Yale University, Brown University, University of Michigan, NBER Public Economics Meeting, University of Chicago, IIES-Stockholm, NHH, and University of Oslo. This paper evaluates the marginal benefits of investments in public school facilities in the United States using the housing market. Ferreira found that house prices increase by about 6 percent after school bonds targeted to facility investments are approved by school districts. Such large impact on house prices does not seem to be driven by increases in test scores or changes in the composition of local residents. Overall, the paper demonstrates that districts used in the study had an inefficiently low level of public investments. Government should not try to stop housing price declines, says Gyourko
Prof. Joseph Gyourko's paper, "The Case Against Housing Price Supports," co-authored with Ed Glaeser, has been published in The Economists' Voice (Berkeley Electronic Press, Vol. 5, No. 6, 2008). "Economists and politicians have eagerly proposed policies aimed at stopping the decline in housing prices. The government can't and shouldn't be trying to stop price declines," summarized the publication. Gyourko served on a "panel discussion/teach-in" on September 16 in the Zellerbach Auditorium of the Annenberg School, reflecting on the still-unfolding turmoil in the financial services industry. The work of Gyourko, Fernando Ferreira and Joseph Tracy was summarized in the October NBER (National Bureau of Economic Research) Digest, in "Referring to Housing Busts May Lower Household Mobility." The article states that using two decades of American Housing Survey data from 1985 to 2005, "researchers Fernando Ferreira, Joseph Gyourko, and Joseph Tracy estimate that negative home equity reduces homeowners' mobility. Indeed, mobility is almost 50 percent lower for owners with negative equity in their homes than for those with positive equity. In a weak housing market, it seems, households get 'locked in' to their homes and are prevented from 'moving up' to larger homes and better neighborhoods." Linneman speaks on the current financial crisis
Peter Linneman addressed the Undergraduate Real Estate Club on "Turbulence in the Markets: A Discussion on the Evolving State of Real Estate Finance" on October 7. Linneman discussed the current financial crisis and its foremost causes. He explained its relevance, from its effects on lending and debt-related securities, to regulation and oversight in real estate markets, to access to capital for development and equity investments. Linneman's expertise was sought for "Financial Rescue Efforts Miss Mark" in the Commercial Property News (Oct. 20.) The article states, "The federal government's efforts to steady the financial markets may be well-intentioned, but they are not addressing the heart of the problem, argues real estate finance expert and economist Peter Linneman… 'Lest you think that nationalization is a panacea, we've been to this movie before,'" said Linneman, …The history of government-controlled banks is rife with political scandal, insufficient lending and inefficiency, charged Linneman… A massive intervention in the banking system also misses the mark because it fails to boost investor and public confidence, which Linneman views as the real issue. …Linneman suggested that the government would have been much better off taking an alternative approach to unblocking. Rather than buying massive amounts of paper, the government should have decided to guarantee all loans made during between 2004 and early 2007. That would have instantly increased the status of all loans to government grade, thereby increasing investor confidence and helping re-start capital flows, Linneman argued." In "Transparency in Seniors Housing Still a Work in Progress, in the National Real Estate Investor online column, Penton Insight (Sept. 29) Linneman is quoted: "The key to attracting more investors to the seniors housing industry is to become as transparent as the traditional commercial real estate asset classes and to develop a more compelling storyline to market the product.'" Linneman will moderate the December 2 panel noted in Business Wire's recent article, "Real Estate Titans and Global Investors Convene at Knowledge@Wharton Forum to Address How Emerging Economies Are Coping with the Credit Crisis." Joining him will be Sam Zell and Eyal Ofer (chairman, Ofer Global Holdings, U.K.), addressing what the financial crisis means for real estate markets globally. Linneman was interviewed for "Minefield won't last forever, says economic expert," in the Deseret Morning News (Oct. 22). "'As long as we don't screw up in a policy way, four years from now, beyond our imagination, capital will be flowing in the economy,' [Linneman] said, noting business boomed four years after the 2001 terrorist attacks. But policy will be key … The 'great capital strike' will last another year, or maybe 18 months, he predicted." Nakahara serves on "green" panel
Asuka Nakahara will moderate a panel, "The Decision to Go Green: Why leading companies are seeking out green buildings" on November 14, at the 2008 Net Impact Conference at the Wharton School. The title of the conference is "The Sustainable Advantage: Creating Social and Environmental Value." His panelists will include Brian Cohen, a vice president of Liberty Property Trust, Robert Gross, a Principal and the Director of Real Estate and Facilities Management at the Vanguard Group; and Brian Schwagerl, Vice President of Corporate Real Estate and Facilities Planning of the Hearst Corporation. Rybczynski speaks on affordability; serves on awards panel
Witold Rybczynski's article on housing costs and affordability appeared this fall in the Wilson Quarterly, and was reprinted by the Dallas Morning News. He was invited to lecture on Vizcaya, the subject of a recent book, in San Francisco by the northern California chapter of the Institute for Classical Architecture. He also spoke at an international symposium on Andrea Palladio in Marberg, Germany. Rybczynski served on this year's jury for the ULI J.C. Nichols Prize (awarded to Barton Harvey and Enterprise), and he spoke on behalf of the jury at the award ceremony in New York. Rybczynski continues to write regularly for Slate, where he is architecture critic. Don't set your sights, or your prices, too low, says Sinai
Todd Sinai was quoted in the October 16 New York Times, in "Home Prices Seem Far From Bottom," by Vikas Bajaj. "The American housing market where the global economic crisis began, is far from hitting bottom. 'The No. 1 thing that drives housing values is incomes,' said Todd Sinai … When incomes fall, demand for housing falls.'" Unemployment is rising, and some incomes are stagnant or declining. "Declines in home prices have been painful to homeowners," but "the quick decline might help the markets reach bottom faster than in previous housing cycles." Sinai was consulted for the article "When Cutting the Price, Take a Big Bite, Not a Bunch of Nibbles" in the Washington Post of August 24. "Cutting the price to get your home sold isn't quite as simple as it seems," wrote Elizabeth Razzi. Sinai "offered an approach [to pricing] geared more toward sellers who are willing and able to wait for the one buyer most likely to pay top dollar (at least today's top dollar) for a specific home. 'The number one most important thing to sell your home is to get a lot of people through the door to see it,' he said. 'You have to find the person for whom this is the most ideally suited house. They have the highest willingness to pay for it.'" He cautioned about setting the price too low, waiting for competing bids to bring the price up to the proper level. "'The trouble with that strategy is you might cheat yourself out of enough time on the market to attract the buyer who will fall in love with your specific home. You don't want to set the initial price so low that someone who isn't the one with the highest willingness to pay places an offer," Sinai said. 'You should be willing to wait a bit for that.'" Sinai's October 8 PowerPoint presentation for the Real Estate 101 class has been posted on the students' webcafe . Wachter warns about unemployment consequences
Susan Wachter has been in the news frequently in the last few months with widely covered stories on the ongoing mortgage crisis, worsening global financial situation, and government plans to intervene in the U.S. economy. In "Impetus for lower mortgage rate stunts housing too," from Reuters on November 6, Wachter was quoted as saying, "It's critical that mortgage rates stabilize, but it's not sufficient to find a bottom to housing prices. The threat of recession is not going to take us forward." Concerning the five-year high in unemployment, Wachter said, "If you are in a two-income household, and one is unemployed or one may be unemployed, that's going to affect your confidence, your desire to go out and get a mortgage to buy a home and also whether you can be underwritten for the mortgage. What happens to unemployment is absolutely critical here." Professor Wachter also has been quoted in the Wall Street Journal, USA Today, The Christian Science Monitor, US News and World Report, International Business Times, Forbes, Washington Post and the Associated Press regarding the mortgage and financial crisis. Dr. Wachter has appeared several times each on Bloomberg TV, CNBC's "Closing Bell" and CNBC's "The Call" as well as on CNN's "Nightly Business Report," Fox Business and CSPAN. Dr. Wachter has also appeared on the radio for NPR's "On Point" and NPR's "Marketplace" as well as on several occasions for BBC World. Dr. Wachter has also delivered addresses on this topic to the Center for American Progress (broadcast live on CSPAN), the Hudson Institute, and Penn Law School. She also presented a paper at the Shape of the New American City Conference on "Urban Growth and Housing Affordability: The Conflict;" at the Center for American Progress on "Rethinking Mortgage Finance After the Meltdown;" and "The Subprime Mortgage Crisis: What's Next?" at the Hudson Institute.
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