UCI News

Reassessing the American dream

Kerry Vandell discusses the current state of real estate and how a UC Irvine-hosted research symposium can benefit the new presidential administration.

by Jason Mednick, University Communications | February 17, 2009
Reassessing the American dream
House in foreclosure Jeff Turner / Real Estate Shows

With America stuck in a housing-led recession, UC Irvine is helping lawmakers find the right policies to move the country forward.

A two-day research symposium titled “Housing After the Fall: Reassessing the Future of the American Dream” will bring top real estate and mortgage experts together to discuss issues likely to shape future housing and community development policy. The goal: to collect articles and commentary for President Obama and Congress that review and analyze the housing and mortgage markets and make concrete policy recommendations for recovery.

The Feb. 19-20 symposium is sponsored by UC Irvine’s Paul Merage School of Business Center for Real Estate and the MacArthur and Rockefeller foundations. Noted economics professor Karl Case is scheduled to deliver the keynote address. The event will be held in partnership with a housing policy conference at the Furman Center at New York University.

Kerry Vandell, Center for Real Estate director, organized the event along with UCI professors Marlon Boarnet and Jan Brueckner. Here, Vandell discusses real estate and how the symposium can benefit the new administration.

Q: What is the state of the U.S. housing and mortgage markets?
A: The housing and mortgage markets have not been this bad since the Great Depression in terms of property value declines and the disruption of money flow into the mortgage markets. That has been a real problem, more so than ever in the postwar era. There were several periods of regional problems (including in Southern California and the Northeast) where credit was tightened because of increased risk of loan default, but nothing of the magnitude we have seen today.

Q: Why is it important for the housing and mortgage markets to recover?
A: We have seen a decline in the values of many types of assets, including houses. It is absolutely necessary that the housing market recover because it is such an important part of the economy. Once lenders opened up a variety of new mortgage products, which homeowners used as piggybanks in too many cases to feed excessive spending, it was a potential Pandora’s Box. Proper loan underwriting standards and pricing were not in place, considering the risks that type of credit presented. Improper ratings on new mortgage-backed securities also fueled the flames. It is very important that we re-establish a balance that helps keep consumer consumption at sustainable levels and prices mortgage credit properly.

Q: Why is this symposium important now?
A: Most of America’s attention has been focused on how we got into this mess and who is to blame, and debating which policy proposals will and will not work. We are not paying enough attention to where we should be, what we can learn from the current economic situation, and what we can do to restructure the economy in ways that will help prevent another situation like this from occurring. We also can use the opportunity created by the crisis to achieve longstanding sustainability and affordability goals.

Q: How can the symposium, along with UCI research, make an impact?
A: Many of the topics we study at the Center for Real Estate, such as mortgage availability and urban development, are relevant to future policies that could emerge in light of the economic situation. We have a unique opportunity to conduct sound academic research that could have a direct impact on public policy and make a measurable difference. It is not often you are presented with a situation that is of such importance and in need of immediate help. This is one of those times.