                         |
 | |||||||
Wharton News In memoriamIt is with deep sadness that we announce that two Wharton alums, Nicole Korczykowski, W '01/C'01, and Johnathan Perry, W '02, were killed aboard the Continental plane that crashed outside Buffalo on February 12. Johnathan was an associate member of the Zell/Lurie Real Estate Center. He was head of the International Asset Management Group at W.P. Carey & Co., responsible for establishing and overseeing an Amsterdam office that manages nearly $3 billion in assets invested across 13 countries. Nicole graduated from the Huntsman Program in International Studies & Business. Working for Barclays Capital in Manhattan, she had been promoted to the position of director, the youngest in the history of the firm. We offer our condolences to the families and associates of Nicole and Johnathan. Shorenstein Gift Aids Student Placement Doug Shorenstein Doug and Lydia Shorenstein have made a major gift to the Center to implement and upgrade student placement and career services efforts. Mr. Shorenstein is chairman and CEO of Shorenstein Properties LLC. One of our missions is to help train the future leaders of the real estate industry; successfully placing them in interesting and productive jobs is especially important in times like these. The Shorensteins' gift is of obvious benefit to both students and employers, and provides an important comparative advantage for our program in recruiting the best students in the future. We gratefully acknowledge the Shorensteins' generosity. Women in Real Estate PanelThe School of Design and the Wharton MBA Real Estate Club co-hosted a Women in Real Estate Panel on February 23.The discussion on navigating the real estate industry from a female perspective was moderated by Marilyn Taylor, Dean of the School of Design and former Chair of the Urban Land Institute. Panelists were Sabrina Gleizer, iStar Financial; Audrey Greenberg, ING Clarion; Joan Hooke, Trammell Crow Company; and Randi Kahn, Somerset Financial Group. Housing boom to housing bustAlbert Saiz's research was cited in "The Growing Foreclosure Crisis" (Washington Post, 1/09). The mortgage crisis has affected people from all classes and income groups, not only those with subprime mortgages. In October, the number of delinquent prime mortgages exceeded the subprime loans in danger of default. While California is especially hard-hit, "In Las Vegas and Florida, speculators and second-home buyers snapped up properties as fast as anyone could build them. In California, buyers competing for a bit of coastal real estate drove prices to levels beyond most people's reach, said Albert Saiz… Buyers frozen out of those markets moved further inland, to areas such Riverside County, where land was plentiful. 'That demand translated into new construction,' Saiz said. 'Homeowners who are now "underwater," who owe more on their mortgages than their houses are worth, are part of that wave that afflicts "neighborhoods of every stripe—but particularly communities created by the boom itself,' as Saiz noted, most acutely in California and other high-growth regions, such as Arizona, Nevada, Florida and pockets of the Washington region. One of every five mortgage holders is now underwater.  Albert Saiz Saiz is also cited in "Urban playground: As politicians weigh economic stimulus for cities, research suggests a surprising way to succeed: make it fun" (Boston Globe, 1/09.) Instead of spending billions to build and repair infrastructure, "some social scientists who study regional growth have turned away from such joyless nitty-gritty and are instead turning to another tool for improving economic health: fun. In a paper published this month by the Federal Reserve Bank of Philadelphia, economists Albert Saiz and Gerald A. Carlino looked at 150 metropolitan areas around the United States and found that those rich in what they called 'consumption amenities'—the things that make a city delightful, such as parks, historic sites, museums, and beaches—'disproportionally attracted highly educated individuals and experienced faster housing price appreciation.' In other words, urban growth and prosperity have less to do with transportation links and industrial infrastructure than the patterns that govern behavior at a social mixer: Beautiful and charming cities draw a crowd, while the featureless and unattractive wilt like wallflowers. . . This suggests a different approach to stimulus spending—and, likely, stark assessments about where to spend it that will not make for popular politics. "If you have sun and a beautiful beach and 300-year-old buildings, it's no wonder that you're going to attract people,' said Saiz. 'But that's no use for Detroit or Syracuse.'" Also cited was a "pioneering paper" from 2000 by Saiz, Glaeser and Kolko, "Consumer City," which challenged "traditional urban economic theory that companies flock to cities because of the economic benefits of being near one another… Those who could live wherever they wanted to, the authors concluded, would probably choose to live in the same kinds of places they would want to vacation." Gyourko: Thumbs down on 4 percent loansJoe Gyourko was interviewed in February for the National Public Radio article, "Housing Fix? Republicans Push for 4 Percent Loans." NPR's Chris Arnold reported that although a 4 percent home loan might stimulate the economy and help debt-ridden home-buyers, some economists are cautious about the supposed "free lunch." "'I think there's the potential for a very large price tag associated with this, yes,' said Joe Gyourko… He says the plan wouldn't spark enough home buying to stop home prices from falling further. But he says the new loans for home purchases could go bad as home prices keep plunging, and the government would be on the hook for those loans. 'I don't know that it will happen, but I know that it's wrong to assume it won't, because I personally think house prices are going to keep falling,' Gyourko says. 'So to encourage citizens to make leveraged bets on a market in decline strikes me as very unwise. I don't understand why the government wants to do this.'" Gyourko suspects that people would save the money from refinancing, not spend it. He thinks the government should instead focus on helping homeowners at risk of foreclosure.  Joseph Gyourko He was quoted in Time Magazine (2/23), in "How to Fix the Housing Market." Barbara Kiviat wrote, while some "market watchers think we might see prices drop an additional 10% to 15% nationally before this thing is over--then spending billions to spur on buyers won't be a magical fix. 'To prop up prices above fundamentally justified levels is throwing good money after bad,' says Joe Gyourko. Overboosting homeownership helped get us into this mess, after all." Gyourko was quoted in "Solutions to the nation's housing bubble still up in the air" in the Christian Science Monitor in December. The paper reports that "Gyourko sympathizes with Mr. Obama's reluctance to spell out a solution" to the housing crisis. . . 'You look at the size of the problem and it takes your breath away.'" Gyourko predicts "'the number of endangered home owners might rise to 10 million,' and the president will soon 'have put together a proposed remedy for the multitrillion dollar housing crisis.'" Gyourko said low-interest home loans, could be "very expensive" for the government. Nonetheless, the housing crisis offers an opportunity to rethink federal housing policies, maintain Gyourko and Edward Glaeser, in "Rethinking Federal Housing Policy: How to Make Housing Plentiful and Affordable," their new book from the American Enterprise Institute (available for free download here). Federal subsidies are a "laudable goal," says Gyourko, but have not worked well. Gyourko and Glaeser would also like to see federal subsidies for low-income housing eliminated in favor more Section 8 housing vouchers. They urge gradually lowering the cap for mortgage deductions, now set at $1 million, to $300,000 in areas where zoning and other restrictions discourage new housing. The revenues thereby raised should be channeled back to those areas to subsidize new housing construction and thereby lean against restrictive zoning laws. Gyourko and Glaeser wrote about their ideas in the December 16 New York Times' "Today's Economist" column, in "Two Ways to Revamp U.S. Housing Policy." "America shouldn't waste the current housing crisis. With prices plummeting, foreclosures soaring and the mortgage market in disarray, the country should rethink a federal housing policy that has failed," they wrote. "The policies that got us here . . .put too much faith in subsidized borrowing. Encouraging everyone to make highly leveraged bets on housing was patently a mistake. Housing policies of the past also erred by aiming at amorphous, often contradictory objectives, including higher homeownership rates, more affordable housing units and, most recently, higher prices. Those policies then mistakenly applied the same policy medicine to every housing market, whether housing was abundant and inexpensive or scarce and unaffordable." . . . Discussing a more sensible approach to housing policy, Gyourko and Glaeser point to their new book, in which they argue that "federal housing policy should ensure that our poorest citizens are able to live in decent housing, and should address the high housing costs facing many middle-income Americans." The solutions to these two problems do not involve subsidized lending. For more on this, go to http://www.aei.org/docLib/20081205_RethinkingFedHousingPol.pdf Gyourko and Glaeser's book drew attention in a February National Review Online article, "Loosen Housing Markets." The economists' thinking on the home mortgage interest deduction, "which is designed to increase the availability of owner-occupied housing, [and] has a perverse effect in supply-constrained regions: Instead of making it easier for people to buy houses, it simply bids up the price." Glaeser and Gyourko's recommendation capping the home mortgage interest deduction is cited. Linneman predicts eventual recovery Peter Linneman Peter Linneman has had a busy time examining the economic meltdown and forecasting its resolution. In "How Bad Is This?" (December Real Estate Investor) Linneman is quoted as saying, "many people who were stunned by the severity of the current economic turmoil have been surprised to find that this recession ranks as only the fourth worst in the past 40 years." Concerning government bailouts, Linneman doesn't want to see the federal government repeat the mistakes of the past. "In the '70s we looked to the government for answers, and the government gave us answers that over the next few years turned out not to be very good answers. We're at a similar challenge point right now. Relying on government to save us is a dangerous situation," says Linneman. In February, Linneman addressed the annual meeting of the New Jersey Chapter of National Association of Industrial and Office Properties. He also addressed NAI (a commercial real estate services company in Princeton), advising them to "stay wary of government help." He forecast that when a recovery eventually begins after a year or more, the pace of growth could be faster than that following past recessions: "Keep your helmet on and your chin strapped." His comments and forecasts for NAI were reported in regional and international newspapers, in the National Real Estate Investor also in December, in "NREI by the Decades," and in "Global Economic Slowdown Taking Toll on Property Markets," on the PR Newswire. In a white paper he wrote, reported in Commercial Property News, Linneman projected that the U.S. population will grow by 45 million people in 2020. In "Where Will Growth Occur?" he predicts that warm-weather markets will have the strongest potential for commercial and residential growth—especially for baby boomers. "Echo workers" will find jobs in the service sector attractive and exciting, choosing urban areas since they will begin families later in life. Rybczynski writes and lectures Witold Rybczynski
Witold Rybczynski lectured at the 1000 Jahre Andrea Palladio Symposium in Marberg, Germany. He visited the new Israeli city of Modi'in, designed by Moshe Safdie, and is writing a chapter on urban design for a book on the city. He lectured on his book, Last Harvest, at the University of Windsor and Temple University. He was a featured speaker at a conference on Climate Change and the New Frontiers of Urban Development, at the Law School of the University of Colorado at Boulder. His architectural essays appeared this fall in The New York Times Book Review and the Wall Street Journal. Rybczynski's latest book, My Two Polish Grandfathers: And Other Essays on the Imaginative Life a memoir, was released earlier this month.
Wachter is sought out for mortgage crises analysis Susan Wachter Susan Wachter has been in the news frequently in the last few months with widely covered stories on the ongoing mortgage crisis, global financial situation, and federal government bailout and stimulus efforts. She has been quoted in the Boston Globe, USA Today, The Wall Street Journal Asia, US News and World Report, The San Francisco Chronicle, Detroit Free Press, Forbes, and Associated Press regarding these topics. Dr. Wachter has also appeared on radio for NPR's All Things Considered as well as CNN with Lou Dobbs' Moneyline. Among many other appearances and presentations, Dr. Wachter testified in November before the U.S. Senate Committee on Banking, Housing, and Urban Affairs on "Stabilizing the Housing Market," and delivered the keynote address, "Understanding the Sources and Way Out of the Ongoing Financial Upheaval," to the Conference on Property Markets and Finance of Hong Kong Monetary Authority, in January. Housing Finance Program goes to Johannesburg; Conducts emerging market program hereThe Housing Finance Workshop for Sub-Saharan Africa, conducted by the Wharton School's International Housing Finance Program under the direction of Marja Hoek-Smit, was held in November 2008 at the University of the Witwatersrand, Wits Business School, Johannesburg, South Africa. Support for the workshop was provided by the World Bank and FinMark Trust. More than 50 people from 15 sub-Saharan countries participated. On the last day, students took part in a study tour to inner city Johannesburg and Soweto, to view and learn about different housing types in South Africa and the financing issues related to these types: inner city rental, new private sector affordable housing delivery, old apartheid housing, new government subsidized stock, backyard rental, etc. Coming in June is the "Housing Finance in a Changing Global Environment" program, an annual two-week housing finance program for emerging market economies with a special focus on the current deepening economic and financial crisis and the consequences for housing markets and housing finance systems. The course will have special sessions dedicated to Islamic Finance and Sharya compliant securitization. A two day workshop on securitization will close the June program. For information and application instructions, go to http://ihfp.wharton.upenn.edu/ or email housingfinance@wharton.upenn.edu. Hoek-Smit's advice sought in Far-East, South America and Africa Marja Hoek-Smit In the fall, Drs. Hoek-Smit took part in missions to Mexico, Indonesia and Egypt to advise on dealing with the increasing liquidity and credit crisis that causes stagnation in housing finance systems in emerging market economies after several years of steady progress. She gave several public lectures in Indonesia for financial sector professionals on the fundamentals of the U.S. subprime crisis and lessons for emerging markets, and what caused it to deepen into the current financial and economic crises.
|
