Distressed Debt and the K-Shaped Recovery

Clayton Dube (Director, USC U.S.-China Institute) joins Richard K. Green (Director, USC Lusk Center for Real Estate) to discuss the condition of U.S.-China relations and the latest developments in China’s global influence on trade, supply chain issues, technology, and more. Dube highlights a challenge Chinese officials are watching closely in the coming years: stalling economic growth. To approach the “middle-income” problem, Dube notes the ways in which the government has both relaxed and tightened its grip on markets in an effort to continue the economy’s upward momentum.

 

Included in the discussion:

Security concerns between the U.S. and China

The important distinction between China’s total Gross Domestic Product (GDP) and GDP per capita

How China’s tech rivalry with the U.S. is evolving

Why Chinese firms have overpaid in key U.S. real estate transactions

 

More:

https://lusk.usc.edu/perspectives

Joyce Chang (Managing Director & Chair of Global Research, JPMorgan Chase & Co.) delivers an overview of global economic trends to watch heading into 2023 and beyond.

In the near term, Chang sees a mild recession taking effect in late 2023, with a true “soft landing”, as identified by the Federal Reserve, being unlikely. She notes that overall cycles may be shorter, with a likelihood of 4-year recessions rather than the historic 8 or 10, and markets that rally faster to regain losses.

Included in the long-term outlook are remarks on China’s slowing growth, regions that could benefit from supply chain shifts away from China and nearshoring, and the political divides in the US around ESG (Environmental, Social, Governance) projects and investing.

Richard K. Green (Director, USC Lusk Center for Real Estate) also fields questions on the US housing crisis, how rapidly rising interest rates could affect regional banks and nontraditional finance, the implications of a global aging population, and more.

Timestamps:

00:00 Introduction

01:48 Presentation

41:08 Q+A

 

More:

https://lusk.usc.edu/perspectives

Lusk Director Richard K. Green delivers highlights from the 2022 Casden Multifamily Forecast.

Before Green gives a breakdown of Southern California multifamily real estate markets, he pauses to discuss four uncertainties impacting the region. Inflation, interest rates, net migration, and the impending recession are all top-of-mind issues that could dilute the forecast’s potency should any of the factors take a dramatic rise or dip.

As for the forecast, Green reviews historical and forecasted data on each market, including overall economic resiliency, net migration since the pandemic began, construction activity, vacancy rates, rent growth, and more. Regions covered include Los Angeles, Orange County, San Diego, the Inland Empire, and Ventura.

More:

https://lusk.usc.edu/perspectives

An industry panel discusses the changing dynamics of office work in real estate and beyond.

By now, it’s apparent that some version of remote work is here to stay for a dominant number of firms. Remote and hybrid work can solve serious employee issues like flexibility, commute times, and even productivity. However, the new work arrangements are not without drawbacks.

Moderator Mary Lynne Boorn (Associate Professor, USC Sol Price School of Public Policy) invites Allison Lynch (Compass Ventures), Amalia Paliobeis (Senior Director, Portfolio Management, AvantStay), and Brandi Popovich (Vice President, Talent Acquisition, SoLa Impact) to bring insights from their unique perspective on hiring and retention, adaptive management styles, office space, and to discuss lessons learned in distributed work environments.

Included in the discussion:

- The new costs of mandating an entirely in-person work week

- How remote environments impact mentorship

- Crucial in-person activities for employees and employers

- Strategies for preserving company culture

 

Links to mentioned resources:

The Work/Life Integration Project - http://worklife.wharton.upenn.edu/

 

More:

https://lusk.usc.edu/perspectives

Racial bias in home appraisals and assessments is not just an anecdote. Norm Miller (Hahn Chair & Professor of Real Estate Finance, University of San Diego and Vice President, Homer Hoyt Institute), Ruchi Singh (Assistant Professor, University of Georgia), and Richard K. Green (Director, USC Lusk Center for Real Estate) discuss the statistically significant racial and ethnic biases in appraisals and tax assessments.

Miller details the benefits of automated valuation models, but he also cautions that using machine learning without human oversight of variables can result in a different set of biases.

Singh shows how assessments are regressive, often resulting in a mismatch of a lower property value with higher property taxes. She also points out contributing factors, including why excluding information like nearby schools or the condition of the home can set the assessments in opposition to appraisals.

 

More from the discussion:

How to make the assessment process fairer

The importance of loan-to-value ratios in underwriting

Pressure appraisers face in avoiding errors

Why short-term and long-term appraisal models will be required to avoid bias

 

Relevant links:

New York Times Story: Home Appraised With a Black Owner: $472,000. With a White Owner: $750,000.

https://www.nytimes.com/2022/08/18/realestate/housing-discrimination-maryland.html

 

Freddie Mac: Racial and Ethnic Valuation Gaps In Home Purchase Appraisals

https://www.freddiemac.com/research/insight/20210920-home-appraisals

 

William Sprigg’s Perspective:

https://lusk.usc.edu/events/racial-justice-and-economics-crucial-pairing

 

Freddie Mac’s Appraisal Institute Diversity Initiative:

https://www.appraisalinstitute.org/the-appraisal-profession/appraiser-diversity-initiative/

 

More:

https://lusk.usc.edu/perspectives

Industry practitioners in lending and policy discuss the research and recommendations in the recently released paper “ADU Construction Financing: Opportunities to Expand Access for Homeowners.”

The joint paper, produced by the UC Berkeley Terner Center for Housing Innovation and the USC Lusk Center for Real Estate, compiles national data and stakeholder interviews to provide a picture of the hurtles to financing and what barriers could be removed to bring ADU construction to scale.

 

Included in the discussion:

• Recent updates to Freddie Mac’s ADU policies
• How friction during financing curtails homeowner commitment
• Appraisal gaps in accurately assessing ADU value
• The role contractors play in mitigating financial risk
• The importance of targeted consumer protections as more data emerges

Paper Link:

https://lusk.usc.edu/adu-construction-financing-opportunities-expand-access-homeowners

 

Introduction and Sponsor Remarks:

• Richard K. Green (Director, USC Lusk Center for Real Estate)
• Amy Anderson (Senior Vice President, Wells Fargo Foundation)
• Racheal Meiers (National Leader, Economic Opportunity, Kaiser Permanente)

 

Federal Context:

• Erika Poethig (Special Assistant to the President for Housing and Urban Policy, The White House Domestic Policy Council)
• Diane Slemmer (Single Family Affordable Lending Manager, Freddie Mac)

 

Panel Discussion:

• Ben Metcalf (Managing Director, UC Berkeley Terner Center for Housing Innovation)
• Meredith Stowers (Branch Business Development Manager, Cross Country Mortgage, LLC)
• Susan Geddes Brown (Chief Executive Officer, Core SGB, LLC)
• Samar Jha (Government Affairs Director, AARP)

 

More: https://lusk.usc.edu/perspectives

Richard Green (Director, USC Lusk Center for Real Estate) delivers a presentation on how the ongoing conflict in Ukraine could impact the global economic trajectory as many countries, including the United States, attempt to cool inflation without triggering a recession.

Green dives into more specific factors contributing to the USA’s resiliency or vulnerability to global economic shocks. He shares data on why Cap Rates are likely to increase in the future, the trends economists look for with the revitalization of goods and services spending, how real estate impacts inflation, and which US states boast more robust infrastructure to weather any potential global economic downturns. Green also fields questions on affordable housing, the global aging workforce, commercial mortgage rates, and more.

Austin Beutner (Founder and Chair, Vision to Learn) joins Richard Green (Director, USC Lusk Center for Real Estate) for a discussion on what it takes to accomplish real change in Los Angeles. 

 

Beutner asserts that the twin forces of leadership and governance have the power to solve many of the ongoing and intensifying issues in the county like homelessness, education, and land use. As Superintendent of LAUSD during the pandemic, Beutner oversaw unprecedented responses like providing free food for the community, securing broadband internet access and devices for students in need, and providing reliable and cost-effective COVID testing for the nation’s second-largest school district. Other school districts in 40 states across the country adopted the models LAUSD pioneered to meet their own community needs.

With that crisis response as the groundwork, Green and Beutner cover such topics as the inherent limits to the Los Angeles mayoral office, what structures hold back the capacity for LA County to respond effectively, and Beutner’s latest project: a ballot initiative to bring the arts to all schools in California, Vote Arts and Minds.

More: https://lusk.usc.edu/perspectives

Dana Goldman (Dean, USC Sol Price School of Public Policy) joins Richard K. Green (Director, USC Lusk Center for Real Estate) to provide a look into how the economics of health care contribute to decisions about health policy and the strides that medicine is still making to close gaps in access to care.

Pulling from a variety of case studies, Dean Goldman shows why markets don’t always work in providing the most cost-efficient care, the economic balance between encouraging innovators and ensuring affordability, and the different ways policymakers and patients determine the value of health. Green and Goldman discuss the evolution of treatments for end-of-life care and the risk of relying solely on philanthropy or intrinsically motivated actors to drive innovation. Goldman also provides potential alternatives to the current system to increase healthcare access and keep medical science moving forward.

More: https://lusk.usc.edu/perspectives

Claudia Sahm (Director, Macroeconomic Research, Jain Family Institute) joins Richard K. Green (Director, USC Lusk Center for Real Estate) to look at the US Economy and how the Federal Reserve is responding to inflation, unemployment, and interest rates.

Sahm cites that the big picture points to economic recovery, especially while the Fed incorporates the principle lesson of the 2008-2009 financial crisis: remove support gradually or risk a stalled recovery. With appointments incoming, Sahm forecasts that the new and historically diverse Board of Governors will continue to press the Federal Reserve’s dual mandate of stable prices and maximum employment. Crucially, Sahm emphasizes that without an end to the pandemic, the economic tides can only change so much, with or without federal intervention.

More: https://lusk.usc.edu/perspectives