RUTGERS, THE STATE UNIVERSITY OF NEW JERSEY
The Bloustein School of Planning and Public Policy
Urban Planning and Policy Development Program
970:528
Housing Markets & Finance (3.0)
Spring 2011
Dr. Jan S. Wells
jwells@mtahq.org
212-878-7079
Monday 6:10 - 8:40 pm
Room 113
In 2010, the overall U.S. economy appears to have stabilized (although, like a recovering
patient, there is always the danger of relapse). Housing, however, remains a moving
target. While some local markets seem to have gained some breath, the foreclosure
debacle seems to never end. Construction financing, too, has proven to be elusive.
However, affordable housing and green building now offer builders some opportunities
due to available subsidy programs. And, buyers with stable income and good credit can
secure housing at greatly reduced prices at incredibly low interest rates. Still, there are
those foreclosures.........
This spring we will spend the first half of the course on the basics of real estate/housing
finance: demographics of housing demand and supply; time value of money; home
buying and the concepts of mortgages; operating properties and the historic process of
residential development finance; preparing cash flow pro-formas; and tax implications.
The second half of the course will cover "what happened". We'll go into the murky
worlds of subprime mortgages, Wall Street's smoke and mirrors (derivatives, anyone?),
the collapse of the secondary market icons -- Fannie Mae and Freddie Mac, MERS, and
the banks who aided and abetted the madness. We'll spend some time looking at the
foreclosure mess and the impact of foreclosures on local housing markets and
communities.
We will use two texts:
Wiedemer, Goeters, and Graham. 2011. Real Estate Investment, 7th Edition
Immergluck, Dan. 2009. Foreclosed. Cornell University Press.
We will also have numerous articles for reading and speakers from different realms who
will give us their take on who, what ,when and why. The goal is to impart to the student
an appreciation and understanding of the financial components involved in
homeownership and housing development, and to understand the stresses that are
impacting the housing economy today. Course requirements include small written
assignments, problem homework and class participation (40%), Mid-term (30%) and
Final (30%). All readings and assignments will be placed on Sakai or downloaded from
the internet. Knowledge of spreadsheet software such as Excel is necessary. Students are
expected to adhere to the Rutgers policy on academic integrity. See
http://academicintegrity.rutgers.edu/integrity.shtml
Preliminary Syllabus
Class 1 – January 24
Introduction
 Social aspects of housing
 Demand
 Supply
 Market outcomes
 Measures of imbalance in a market: vacancy rate, crowding, and % of income on
housing expenses
 Housing Demography: life cycle and housing choices
See Assignment #1 on Sakai
Class 2 – January 31
Basics of real estate
Assignment #2 on Sakai
Class 3 – February 7
The home buying process
 Review of Assignments #1, 2
 Qualifying for a mortgage
 Tax benefits of a home mortgage
 Issues in affordability, the role of the state
Assignment #3 on Sakai
Class 4 – February 14
Cash flow analysis, operating property
 Review of Assignment #3
 Cash flow analysis of an operating property
 Cash flow pro-formas
 Capitalized value
 After tax cash flow
Assignment #4 on Sakai
2
Class 5 – February 21
Profitability analysis and Construction financing
 Review of Assignment #4
 Profitability: Rate of Return, IRR and MIRR
 Development Process and financing
Assignment #5 on Sakai
Class 6 – February 28



Review of Assignment #5
Analysis of for-sale developments
Role of Appraisals
Assignment #6 on Sakai
Review for Mid-term on Sakai
Class 7 – March 7



Speaker
Review of Assignment #6
Review for Mid-Term
SPRING BREAK!
Class 8 – March 21


Mid-term exam
Secondary Mortgage Market
Assignment #7 on Sakai
Class 9 – March 28

Collapse of the mortgage markets - domestic level
Assignment #8 on Sakai
3
Class 10 – April 4


Collapse of the mortgage markets - global level
Review Mid-term Exam
Assignment #9 on Sakai
Class 11 – April 11


Review Assignment #8
Foreclosure debacle
Assignment #10 on Sakai
Class 12 – April 18
 Speaker
Review for Final Exam on Sakai
Class 13 – April 25

Speaker
Class 14 – May 2

Review Assignment #10 and Final Exam Review
MAY 9 FINAL EXAM
4