12. Real Estate Finance and its Vulnerability to Crisis

Financial Markets (ECON 252)

Real Estate is the biggest asset class and of great importance for both individuals and institutional investors. An array of economic and psychological factors impact real estate investment decisions and the public has changing ideas of real estate as a profitable investment. People's demand to buy a home by taking on long-term debt, called a mortgage, is often tied with the overall health of the economy and financial markets. In recessions, home buying tends to fall and the opposite holds in a strong economy. Commercial real estate, held indirectly by the public through partnerships and real estate investment trusts (REITs), is vulnerable to similar speculative activity. The most recent real estate boom illustrates the speculative nature of real estate, and its relation to financial and economic crises.

00:00 - Chapter 1. Introduction
02:17 - Chapter 2. The Development of Commercial Real Estate Assets, from DPP to REIT
17:34 - Chapter 3. The Evolution of Mortgages and Government Regulatory Measures
30:06 - Chapter 4. The Math of Mortgages, Fannie Mae, and Freddie Mac
41:50 - Chapter 5. Understanding the Current Housing Boom: Comparing Los Angeles and Milwaukee
57:37 - Chapter 6. Domestic and International Real Estate Booms

Complete course materials are available at the Open Yale Courses website: http://open.yale.edu/courses

This course was recorded in Spring 2008.