ECN 443 - Fall 2016
Real Estate Economics and Finance

Stuart S. Rosenthal
Assignments and Dates Listed Below are Tentative
and Will be Updated Through the Semester


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Aug 29 - Sept 12 NOTES Lecture notes 1a and 1b
  URL  Press Articles 2003-2015
    2003 Economic Outlook: Calm Waters Ahead (National Association of Realtors, 2003)
    Be Warned: Mr. Bubble's Worried Again (New York Times, August 21, 2005)
    What Housing Bubble? (WSJ, July 2005)
    Tick. Tick. Beware the mortgage time-bomb (CNNMoney, October 9, 2006)
    Florida foreclosures lead nation (CNNMoney, March 26, 2007)
    Glut of homes hits 16-year high (CNNMoney, August 27, 2007)

Mortgage Security Bondholders Facing a Cutoff of Interest Payments (T Oct 22 2007)

    Borrowers Miss Out on Billions in Savings (Wall Street Journal, March 3, 2010)
  New home sales drop 12.4% to record low (CNNMoney, August 25, 2010)
    Foreclosure Fiasco: 30% of mortgages are underwater ( (February 9, 2011)  
    U.S. Is Set to Sue a Dozen Big Banks Over Mortgages (New York Times, Sept 1, 2011)
    Housing Starts Soar, Driven by Gains in Apartments (New York Times, July 17, 2015)
    There's no denying that the housing market is on fire (Business Insider, July 18, 2015)
    The Housing Market Still Isn't Rational (New York Times, July 24, 2015)
    The housing market is suddenly hot again (CNN Money, May 25, 2016)
    Additional Readings
  URL "The Rise and Fall of Subprime Mortgages," DiMartino and Duca, EconomicLetter, Vol. 2, No. 11 (Nov 2007).
  TXT Ch 1, "Real Estate Finance: An Overview" pages 2-11
  TXT Ch. 10, "The Secondary Mortgage Market" pages 220-229, 235-251
  TXT Ch. 14 "Mortgage Default Insurance, Foreclosure and Title Insurance" pages 348-372
  URL FHFA Quality Adjusted (Repeat Sales) House Price Index Calculator
  URL Current data from RealtyTrac on Home Mortgage Defaults by County
  URL US Credit Conditions - Federal Reserve Bank of New York
  URL Community Mortgage Market Profiles - Federal Reserve Bank of New York
  URL Recent Mortgage Conditions in the Tri-State Area - Federal Reserve Bank of New York
  URL Pulsenomics US Housing Confidence Survey
Sept 14 - Oct 5 NOTES Lecture notes 2a, 2b, 2c, and 2d
    Skip past the more technical portions of the next readings
  URL "Is there a Bubble in Housing Markets?" Case, Karl and Robert Shiller, BPEA, 2, 1-44 (2003).
  URL "Housing Supply and Housing Bubbles," Glaeser, Edward L., Joseph Gyourko, and Albert Saiz, JUE, 64, 198-217 (2008)
  URL "What Have They Been Thinking? Homebuyer Behavior in Hot and Cold Markets" Case, Shiller, and Thompson, Cowles Foundation working paper (2014)
  URL "Housing Price Bubbles, New Supply, and Within-City Dynamics" Liu, Crocker, Adam Nowak and Stuart Rosenthal, JUE (2016)
  URL "When Will the US Housing Market Stabilize?" Duca, Luttrell, and Murphy, 2011
  URL In Defense of the Dismal Science (Lucas, in the Economist, August 6, 2009)
  TXT "Income Tax Provisions" pages 166-167.
Oct 10 - Oct 17 NOTES Lecture notes 3a and 3b
    These next three items should be read as a single unit.
  TXT Appendix 1, pages 581-588, A Refresher on the Time Value of Money and Related Concepts
  TXT Ch. 5, Appendix A, pages 97-99, Elements of the Discounted Cash Flow Model of Valuation
  TXT Ch. 5, pages 86-97, Fixed-Rate Mortgage (FRM) Mechanics
    Practice Problems - You will be asked to provide and explain your solutions in class.
  TXT Problems 5-1, 5-2, 5-3, 5-4
Oct 19 - Oct 26 NOTES Lecture notes 4 and 5
  TXT Ch 2, "Money, Credit, and the Determination of Interest Rates" pages 12-26
  URL Yield Curve
  TXT Ch. 4, pages 48-53, Early History of Residential Finance
  TXT Ch. 4, pages 53-74, Modern Residential Finance
Oct 31 - Nov 7 NOTES Lecture notes 6 and 7
  TXT Ch. 5, pages 99-101 and Appendix B: "Maturity, Duration, and the Interest Rate Risk of Mortgages"
  TXT Ch. 11, pages 261-263, Valuation of Mortgage Securities.
    Practice Problems - You will be asked to provide and explain your solutions in class.
  TXT Problems 5-6, 5-7, 5-8, 5-9, 5-10, 5-12
Nov 14 - Nov 16 NOTES Lecture notes 8a and 8b
  TXT Ch. 6, pages 102-117, Interest Rate Risk and the Adjustable Rate Mortgage
  TXT Ch. 6, pages 118-142, More on Alternative Mortgage Instruments
  TXT Ch 3, Finance Theory and Real Estate, pages 27-44
  TXT Ch. 6, pages 132-135, Mortgage Refinancing.
  URL Mortgage Refinancing in 2001 and Early 2002, Federal Reserve Bulletin, 469-481 (December, 2002).
  TXT Ch. 6, pages 118-124 (more on "Tilt" and alternative mortgage instruments)
  URL Interest-Only Mortgage Payments and Payment-Option ARMs, Federal Reserve website
    Practice Problems - You will be asked to provide and explain your solutions in class.
  TXT Problems 6-2 and 6-3
Nov 28 - Dec 7 NOTES Lecture Notes 9a-9c
  TXT Ch. 9, pages 197-219, "Federal Housing Policies: Part II"
  TXT Ch. 10, "The Secondary Mortgage Market" pages 252-259 (read from "Regulation of Government-Sponsored Enterprises")
    Recent Press Articles
  URL Greenspan Concedes Error on Regulation, (New York Times, Oct. 23, 2008)
  URL Pressured to Take More Risk, Fannie Reached Tipping Point, (New York Times, October 4, 2008)
  URL The One Housing Solution Left: Mass Mortgage Refinancing (Stiglitz and Zandi, New York Times, August 12, 2012)
  URL Fannie Mae and Freddie Mac: Wind-down or Reprieve? (Amy Poster, Institutional Investor, Feb 11, 2015)
  URL Conservatorship Continues Seven Years Later With No End In Sight (Brian Honea, DSnews, Sept 8, 2015)
    Additional Background Reading
  TXT Ch. 12, pages 315-326, "Controlling Default Risk Through Borrower Qualification, Loan Underwriting, and Contractual Relationships" (Skim through "Borrower Qualification Comparison.")
  URL "Do Borrowers Know Their Mortgage Terms?" Brian Bucks, Karen Pence. JUE, September, 2008
  URL What to do About Fannie and Freddie? Edward L. Glaeser and Dwight Jaffee, Berkeley Electronic Press, September 2006.
  URL Reforming America's Housing Finance Market: A Report to Congress, U.S. Depts. of Treasury and Housing and Urban Development (HUD), February, 2011