10. Real Estate

Financial Markets (2011) (ECON 252)

Real estate finance is so important that it has a very long and complex history. Describing the history of mortgage financing, Professor Shiller highlights the historical development of well-institutionalized property rights for mortgage contracts. Subsequently, he focuses on modern financial institutions for commercial real estate, elaborating on Direct Participation Programs and Real Estate Investment Trusts as means for its financing. The distinction between short-term, balloon-payment mortgages before the Great Depression and long-term, amortizing mortgages thereafter shapes the discussion of residential real estate. His discussion of mortgage securitization and government support of mortgage markets centers around Fannie Mae and Freddie Mac, from their inception in 1938 and 1970, respectively, to the U.S. government's decision to put them into federal conservatorship in 2008. Finally, Professor Shiller covers collateralized mortgage obligations (CMOs) and elaborates on moral hazard in the mortgage origination process.

00:00 - Chapter 1. Early History of Real Estate Finance & the Role of Property Rights
13:39 - Chapter 2. Commercial Real Estate and Investment Partnerships
28:12 - Chapter 3. Residential Real Estate Financing before the Great Depression
32:19 - Chapter 4. Residential Real Estate Financing after the Great Depression
48:02 - Chapter 5. Mortgage Securitization & Government Support of Mortgage Markets
01:01:06 - Chapter 6. Mortgage Securities & the Financial Crisis from 2007-2008

This course was recorded in Spring 2011.