Smeal College of Business The Pennsylvania State University Department of Risk Management Risk Management 450 Contemporary Issues in Real Estate Markets T R 4:15 PM - 5:30 PM 107 Business Building Fall 2015 Instructor: Lily (Yannan) Shen Office: 308A Business Email: yzs131@psu.edu Office Hour: M 9:30 am -11:30 pm COURSE OUTLINE AND SYLLABUS TEXTS: Ling, David C., and Wayne R. Archer. Real Estate Principles: A Value Approach. Fourth Edition: NY: McGraw-Hill, 2009. (Required) Austin Jaffe , and C. F. Sirmans. Fundamentals of Real Estate Investment. Third Edition: South-Western Educational Pub, 1994. (Optional) Ambrose, Brent W., and Lusht, Kenneth, Overview of the Real Estate Industry. 2007. Ambrose, Brent W., and Lusht, Kenneth, Overview of the Commercial Real Estate Industry. 2008. COURSE OBJECTIVES AND DESCRIPTION: This course is an analytical survey of the leading issues associated with the analysis of real estate markets. This course builds upon the introductory courses, R M 303: Real Estate Fundamentals or R M 330W: Real Estate Risk Analysis. In this course, we provide an economic perspective on how and why real estate markets function the way they do. The course adopts historical, analytical, and contemporary perspectives of several of the central issues in real estate analysis. The outline provides a “road map” of the itinerary for this course. We begin with some introductory topics, and then we evaluate real estate within the urban environment. We next investigate real property as rights and the regulation of land, including the takings controversy. The core of the journey takes us to the Real Estate Trilogy: real estate valuation, real estate investment analysis and real estate finance. We continue with an assessment of real estate, the financial crisis, and lastly addressing some local real estate issues in Pennsylvania. Welcome to the world of real estate analysis! 1 Aug 25 Week 1 Macros Real Estate Valuation Fundamentals of Real Estate Analysis 27 Exam Sep 1 2 15 3 T R 4 T R 17 22 T R 10 5 T R 24 29 Micro Real Estate Valuation R 3 8 T 6 T Oct. 1 R 6 T 8 R 13 8 15 20 22 27 T T 10 R T Lecture Content Slide s Date RM 450 Course Schedule Topic Course roadmap Student background survey The Nature of Real Estate and Real Estate Markets (I) The Nature of Real Estate and Real Estate Markets (II) Efficient Market Hypothesis (I) Efficient Market Hypothesis (II) Market Determinants of Real Estate Price (I) Market Determinants of Real Estate Price (II) What Determines Rent and Location Urban Structures Model Review for Exam I Midterm Exam I Real Estate Valuation I – An Overview of Real Estate Appraisal Course Syllabus Workday: Group Presentation Real Estate Valuation V - Real Estate Appraisal: Mass Appraisal 2 (STATA) ;Income Approach 1. Real Estate Valuation VI - Real Estate Appraisal: Income Approach 2 (DCF) Review: Time Value of Money Introduction to Real Estate Investment Analysis I (CAPM, NPV, IRR) 2 Note HW 1 Posted 1 Chapter 1 1 Chapter 1 HW1 Due 2 EMH Handout 2 EMH Handout 3 News Articles 3 Chapter 5 PR Group Signup HW2 Posted Presentation signup HW2 Due 4 Chapter 5 Chapter 5 Exam 1 Review 4 HW 3 Posted HW 3 Due 5 Chapter 7 Sample Appraisal Report Chapter 7 Sample Appraisal Report Chapter 7 6 Regression Examples 6 Sample Appraisal Report Assigned Chapter Regression Examples 5 Real Estate Valuation II - Introduction to Real Estate Appraisal Report Real Estate Valuation III - Real Estate Appraisal: Cost and Sales Comparison Approach Real Estate Valuation IV - Real Estate Appraisal: Mass Appraisal 1 (STATA) Workday: STATA Appraisal Project Reading 7 Chapter 8 Chapter 14 8 Chapter 14 HW 4 Posted HW 5 Posted HW4 Due Presentation Slides Due HW 6 Posted 29 Exam Nov. 3 5 Review for Exam II 12 R Midterm Exam II 11 R Introduction to Real Estate Investment Analysis II (CAPM, NPV, IRR) Presentation: Conveying real property interests (Group 1) Forecasting ownership benefits and value: market research (Group2) Presentation: The Laws and Contracts (Group 3) source of funds for residential mortgages (Group 4) Presentation: Real estate breakage and listing contracts (group 5) Contract for sale and closing (group 6) Convey of Real Estate Property Rights (Lecture) Thanksgiving: No Class 10 T 12 T 17 13 19 Law and Real Estate 24 Exam R T 14 R 26 Dec. 1 T R 3 T 8 10 TBD 15 R T Thanksgiving: No Class Convey of Real Estate Property Rights (Game) Contemporary Real Estate Issues in Pennsylvania I (Mineral Option) Contemporary Real Estate Issues in Pennsylvania II (Mineral Option) Conclude and Review Final Exam Appraisal Project Due G1&G2 Chapter 3 Chapter 6 G3&G4 Chapter 9 Chapter 11 G5 &G6 Chapter 12 Chapter 13 HW 5 Due 9 9 10 HW 6 Due 10 Final Review * All deadlines are announced at least 2 weeks in advance. Plan your schedule wisely. You are welcome to submit homework, project, and other assignments before the due dates. COURSE GRADING AND EVALUATION This course is intended for junior and senior students who are interested in modern real estate analysis. Therefore, it is expected that students will have sufficient background from basic economics, finance, and the introductory real estate course upon which to build. The evaluation of performance in this course will be based upon two non-accumulative midterm exams, one accumulative final exam, six assignments, one project, one in-class presentations and class participation. In addition to the textbooks, there will be several handouts used throughout the semester. There will also be detailed class notes available via ANGEL to accompany the class 3 lectures. The details of the exams, assignments will be provided later. The approximate breakdown between the criteria is as follows: Examination I Examination II Assignments Appraisal Project Presentation Class participation Attendance Final Exam 15% 15% 12% 8% 10% 10% 5% 25% Please note that a student cannot pass this course by failing to take any of the exams independent of the student’s performance on other elements of the course. No late assignments or projects will be accepted, unless there is family/medical emergency. Assignment of the lowest grade might be dropped in favor of the student. Presentation: each student will have an opportunity to give a 5-10 minute presentation on a real estate topic. All topics must be approved by instructor. The presentation slides must be submitted to the instructor a day before the scheduled presentation day by 11:59pm. Important note: Due to scheduling constraints, no make-up presentation will be permitted without written documentation of a medical emergency. Appraisal Project: students will have an opportunity to prepare a comprehensive real estate appraisal report. Detailed project guidelines will be provided later. Class participation: participation grades will be assigned based on the question cards collected from students by the end of every lecture. Both quality and quantity of questions count. Attendance will be taken at the beginning of every lecture. Question cards will be collected at the end of every lecture. Subject to Change Statement: this syllabus and schedule are subject to change in the event of extenuating circumstances. If you are absent from class, it is your responsibility to check on announcements made while you were absent. ADDITIONAL PENN STATE UNIVERSITY REGULATIONS: ACADEMIC INTEGRITY According to the Penn State Principles and University Code of Conduct: 4 Academic integrity is a basic guiding principle for all academic activity at Penn State University, allowing the pursuit of scholarly activity in an open, honest, and responsible manner. According to the University’s Code of Conduct, you must neither engage in nor tolerate academic dishonesty. This includes, but is not limited to cheating, plagiarism, fabrication of information or citations, facilitating acts of academic dishonesty by others, unauthorized possession of examinations, submitting work of another person, or work previously used in another course without informing the instructor, or tampering with the academic work of other students. Any violation of academic integrity will be investigated and, where warranted, corrective academic and/or disciplinary action will be taken. For every incident where a penalty is assessed, an Academic Integrity Incident Report form must be filed. The form can be found on the Smeal College Intranet at this URL: https://intranet.smeal.psu.edu/handi/undergraduate-incident-report-form-aiir/2012-universalacademic-integrity-form.pdf. This form is to be used for undergraduate courses. The report must be signed and dated by both the instructor and the student, and then submitted to Gus Colangelo, Associate Dean for Undergraduate Education, 202 Business Building. Smeal Honor Code: We, the Smeal College of Business Community, aspire to the highest ethical standards and will hold each other accountable to them. We will not engage in any action that is improper or that creates the appearance of impropriety in our academic lives, and we intend to hold to this standard in our future careers. PLAGIARISM / COPYING All work you submit for grading or academic credit is designed to reflect your knowledge and skill related to the course subject matter. Therefore, unless otherwise indicated, all work submitted is to be done on an individual basis. This includes but is not limited to all exams, quizzes, homework, papers, written assignments, and presentations. Plagiarism is claiming work as your own that you have copied from another person, whether that other person knows about it or not. This includes copying from web sites without proper source citation and using homework or papers prepared by current or past students whether working as an individual or working in a group / team. AFFIRMATIVE ACTION & SEXUAL HARASSMENT The Pennsylvania State University is committed to a policy where all persons shall have equal access to programs, facilities, admission, and employment without regard to personal characteristics not related to ability, performance, or qualifications as determined by University policy or by Commonwealth or Federal authorities. Penn State does not discriminate against any person because of age, ancestry, color, 5 disability or handicap, national origin, race, religious creed, gender, sexual orientation, or veteran status. Related inquiries should be directed to the Affirmative Action Office, 328 Boucke Building. AMERICANS WITH DISABILITIES ACT The Smeal College of Business welcomes persons with disabilities to all of its classes, programs, and events. If you need accommodations, or have questions about access to buildings where Smeal College activities are held, please contact us in advance of your participation or visit. If you need assistance during a class, program, or event, please contact the member of our staff or faculty in charge. Access to Risk Management courses should be arranged by contacting the Department of Risk Management Office: (814) 865-4172. AN INVITATION TO STUDENTS WITH LEARNING DISABILITIES It is Penn State’s policy to not discriminate against qualified students with documented disabilities in its educational programs. If you have a disability-related need for modifications in your testing or learning situation, your instructor should be notified during the first week of classes so that your needs can be accommodated. You will be asked to present to the Office of Disability Services (located in 116 Boucke Building (814) 863-1807) documentation that describes the nature of your disability and the recommended remedy. You may refer to the Nondiscrimination Policy in the Student Guide to University Policies and Rules. Aug. 07, 2015 "The Pennsylvania State University does not discriminate against any person because of age, ancestry, color, disability or handicap, national origin, race, religious creed, sex, sexual orientation, or veteran status." 6