Real Estate and Badgers Football

Excitement on campus is high as the UW Badgers football team prepares for its 2011 appearance at the Rose Bowl. As the semester winds down, alumni, students and fans are busily making plans to watch the game. Tickets may be hard to come by, but that hasn't dampened the enthusiasm. It's the seventh trip to Pasadena in school history, and the team's first time since 2000.

All the talk about Badgers football reminded us of Wisconsin Real Estate's football connection through real estate graduate and current Cleveland Browns tackle Joe Thomas. Thomas graduated in 2007 with a B.S. in Real Estate and Urban Land Economics and was subsequently drafted by the Browns.

We looked back in our news archives to June 2007 for an interview we did with Thomas talking about his interest in real estate, what he got out of the program, and his strong work ethic. Here is an excerpt:

What did you like about real estate?

“I think real estate is more hands-on than a lot of other majors. You’re doing a lot more stuff in the field, not so much sitting in a cubicle or at a desk. And just about everybody is affected by it. Anybody who plans on owning a house, it’s such a big advantage to take a real estate class, and to be able to know about a mortgage, what your best options are when buying a house or looking for property.”

What real estate classes did you take, and were they challenging?

“I took Real Estate Process, with Sharon McCabe; Valuation and Appraisal, also with Sharon; Urban & Land Economics, with Morris Davis; Finance, with François Ortalo-Magné; and Residential Development, with Tom Landgraf.

“To me, the whole real estate program just makes sense. A lot of people who are really good at math say that it makes sense to them, and that’s kind of how real estate is to me. It's like a puzzle; everything fits together. It’s not just memorizing it, you just understand it.”

What else did you like about the real estate program?

“The networking and connections that you make. That’s part of the reason why this is the number 1 program in the country: you are involved with different groups, you do projects with each other, you form great friendships. The people you meet here are the people who are going to help you get a job down the line.”

To read the rest of the interview with Thomas, click through to our News Archive.

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Rays of Research: Morris Davis

Last week, Morris A. Davis, associate professor of real estate and urban land economics at the Wisconsin School of Business, presented a summary of his ground-breaking research into the relationship between land and housing prices during the faculty seminar series: Rays of Research. As an often-cited expert on housing and its impact on the macro economy, his work on measuring and studying the determinants of land and housing prices is a particularly illuminating lens through which to look back at the housing crisis.


Click here to watch video of the presentation.


Rays of Research is an ongoing speaker series which presents the progress and innovations of the research done by Wisconsin School of Business faculty to other faculty members, staff, students and the community.

Other real estate faculty who have participated in this series include

• Abdullah Yavas (Experiments in Asset Characteristics in Boom & Bust Periods),
• François Ortalo-Magné (Housing for Smarties), and
• Stephen Malpezzi (The Crisis in Housing & Financial Markets: How Did We Get Here? Which Way Out?).

Videos of these presentations are available through the links above.

Big Ten Network: Office Hours

UW–Madison real estate and urban economics professors Morris Davis and Stephen Malpezzi appeared on Office Hours on the Big Ten Network yesterday to assess the national stimulus package and its implications on the economy, debate its benefits, as well as highlight its shortcomings. The active discussion touched on unemployment, job creation, short and long term effects of the stimulus on the nation's economy, and what happens next.

You can watch the episode online.

Music can beat MS

Assistant Professor Morris Davis is more than just an expert in real estate and urban land economics, he's also a rockin' musician. This Sunday February 21st, he and the band Hot Money will be playing at the High Noon Saloon during the Second Annual "Music Can Beat MS" concert.

Join them--plus Main Street Wisdom, Primitive Culture and more--starting at 5:30 for a great time for a great cause. All funds go to the Wisconsin Chapter of the National MS Society.

See you at the show!

Is inflation coming?

Greg Mankiw's recent blog post on the exploding monetary base sparked some discussion among UW faculty. Morris Davis, assistant professor of Real Estate and Urban Land Economics, shares his thoughts:

Historically there has been a fairly high rate of correlation of growth of trend m1 (which is not the same as growth in reserves), gM, and growth of trend in the consumer price level from NIPA, gP. The picture below shows the two series from 1959:1 – 2009:3. Trends are computed using the HP Filter. The overall correlation (59:1-09:3) is 68 percent and the correlation of the two series after 1985 is 88 percent.

Based on this picture, it does not appear as if we’re in for a sudden spike in consumer prices.
HOWEVER, the HP filter is discounting the recent growth in M1 we’ve had until we see more evidence that the new level of M1 is permanent. You can see this from the graph below that shows m1 and trend M1 from 2000:1 – 2009:3.

That is, in a few years time, the HP Filter might redo its “trend” to take on board the growth in M1 we’ve had (the HP Filter is a 2-sided filter, meaning that new data can affect historical trend calculations).

So I think we need to wait before we can be convinced any inflation is coming.

Also, for what it is worth, I agree with this paragraph from Mankiw:

"Does this mean that investors should stop worrying about inflation? No. Yet the worry should stem not from the monetary base but from the political economy and difficult tradeoffs facing monetary policymakers. As the economy recovers, interest rates will likely need to rise. Will the Bernanke Fed, feeling the political heat, get behind the curve and allow inflation to take off? Will it decide that a little bit of inflation is not so bad compared with the alternative of risking an anemic recovery, a double dip recession, or (gasp!) congressional action to reduce Fed independence? Maybe. This is, I think, the right way to argue that higher future inflation is a plausible outcome."

What costs more: foreclosures or loan modifications?

Yesterday, NPR reported on increased government pressure on the mortgage industry to speed up permanent loan modifications for homeowners under the Obama Administration's 10-month old $75 billion foreclosure prevention effort. UW's Morris Davis responds:

We don’t need mortgage modifications to stop foreclosures. According to a recent Freddie Mac survey, 57% of foreclosures are related to unemployment – only 20% are related to “excessive obligation”, which could also be unemployment related.

What the unemployed need is temporary assistance. The right kind of temporary assistance for the unemployed – either the WI-FUR plan or the Boston Fed plan – will stop foreclosures.

The most costly thing we can do right now is to offer permanent mortgage modifications to the unemployed. On average, modifications to the unemployed cost U.S. taxpayers about $18,000. If we do nothing, each unemployed person with a mortgage costs U.S. taxpayers about $7,000 (because some unemployed households go into foreclosure, and foreclosures are costly when the mortgage is backed by the U.S. government). The total cost of WI-FUR or the Boston Fed plan is less than $6,000 per unemployed person with a mortgage – these plans prevent foreclosures and foreclosures are costly!

Morris A. Davis is Assistant Professor, Real Estate and Urban Land Economics at Wisconsin. Often cited in the national media for his expertise in current housing and macroeconomic issues, he is a fellow at the Lincoln Institute of Land Policy, is on the academic advisory council of the Federal Reserve Bank of Chicago, and worked at the Federal Reserve Board before coming to the Wisconsin School of Business in 2007.

The Wisconsin Foreclosure and Unemployment Relief Plan (WI-FUR) is a proposal by Wisconsin Real Estate faculty to address unemployed homeowners' risk of foreclosure by supplementing unemployment benefits with an additional housing "voucher" payment. Learn more about the WI-FUR plan.

Macroeconomics=Fun to read?

Assistant Professor Morris A. Davis, Real Estate and Urban Land Economics, has authored his first textbook, “Macroeconomics for MBAs and Masters of Finance.”

The book, to be published by Cambridge University Press in December, has been praised for closing a gap between research and textbooks. Edward C. Prescott, 2004 Nobel Laureate and professor at Arizona State University, calls the book, “a dramatic improvement on what is currently available for teaching aggregate economics to MBAs and advanced undergraduates.”

The book covers the foundations of modern macroeconomic theory and provides readers with tools to equip them for advanced studies and professional careers. According to Finn E. Kydland, 2004 Nobel Laureate and professor of economics at University of California at Santa Barbara Davis, has “succeeded in introducing dynamics in a manageable way. At the same time, the book is fun to read.”

Read more at the Wisconsin School of Business Pressroom.