At Home With the Lusk Center

By Roger Cruzen

“There are three great cities in the United States: there’s Los Angeles, Chicago and New York—in that order. You can interestingly contrast Los Angeles to those cities, sure, and Los Angeles even comes out lacking; but Los Angeles is still Los Angeles.”

–Economist Richard K. Green, writing in Richard’s Real Estate and Urban Economics Blog, www.real-estate-and-urban.blogspot.com

Reading his blog, it’s clear that Richard K. Green is fascinated by Los Angeles—which isn’t a bad thing considering he’s the new director of the University of Southern California’s Lusk Center for Real Estate. Moving to L.A. sometimes has that effect on people who have spent most of their lives in the Midwest or on the East Coast, but it can be particularly pronounced among those with an appreciation for urban economics.

“L.A. is the apocalypse; it’s you and a bunch of parking lots,” Green writes in a recent post that sounds like it comes from an L.A. noir novelist. “No one’s going to save you; no one’s looking out for you. It’s the only city I know where that’s the explicit premise of living there—that’s the deal you make when you move to L.A. The city, ironically, is emotionally authentic. It says: no one loves you; you’re the least important person in the room; get over it. What matters is what you do there.”

Here’s the deal Richard Green has made with L.A.: He’s here to transform an already highly regarded academic institute that is part of USC’s School of Policy, Planning and Development and the Marshall School of Business into the nation’s preeminent program for the study of real estate and urban economics—one that’s on par with programs at the University of Pennsylvania’s Wharton Business School and the Haas School of Business at the University of California, Berkeley.

If anyone can make the Lusk Center stand out, it’s Richard Green. Consider his credentials: bachelor’s degree from Harvard, followed by master’s and doctorate degrees in economics from the University of Wisconsin, Madison. Three years as chief economist with the Wisconsin REALTORS® Association. Chair of Real Estate and Urban Land Economics at his alma mater.

A stint at Freddie Mac and, from 2004 until this past August, he was the director of the Center for Real Estate and Urban Studies at George Washington University in Washington, D.C.

“Richard is a rare combination of a superbly well-trained economist who is comfortable with both theory and empirical work and who also is a great communicator,” says fellow economist Dr. Stephen Malpezzi, chairman of Real Estate and Urban Land Economics at UW-Madison and the co-author, with Green, of A Primer on U.S. Housing Markets and Housing Policy. “What really sets Richard apart is his ability to combine those technical and communication skills with a real sense of what the important questions are, and how to address them in a rigorous manner that answers those questions.”

A prolific writer, Green, whose academic work cuts a wide swath across the urban studies and real estate landscape, covering everything from borrowers who prepay mortgages, and why, to the impact of airports on local economic development, barriers to homeownership among Mexican-Americans, and whether property taxes are a good way to finance schools (they are, he says). Currently, he’s studying how various institutions appropriated land from black landowners in the South and is contemplating research that would explore why some homeowners don’t default on their mortgage, even when there are incentives to do so.

That Green became an academic isn’t surprising. His mother chaired the English Department at the University of Wisconsin, La Crosse, and his father was a cardiologist. That he became a real estate economist, however, is serendipitous.

He was just finishing his dissertation on international trade and his wife, Dr. Patricia Harris, now a well-known researcher in geriatric medicine, was in medical school and the couple was running short of funds.

Recalls Green: “It was 1987 and there was a job open as research director at the Wisconsin REALTORS® Association, so I went in and talked to [long-time association president] Bill Malkasian and told him I didn’t know anything about real estate but I knew a lot about research. So he hired me.”

That experience and his later position as economist and director of financial strategy and policy analysis at Freddie Mac helped nurture an appreciation for the real-world business applications of economic theory.

“The real question with economics is ‘How do you make it real?’” Green explains. “What we do has to be realistic in order to help businesspeople understand the world around them and make better business decisions. For example, I teach mortgage pricing. I knew abstractly how it was done, but now I have a more concrete sense so that when I stand up in front of students, I’m comfortable that I know what I’m talking about. Getting out in the world for a year or two is a very healthy thing [for an academic economist] to do.”

Green himself is a study in real-world experiences. In 2000, The Wall Street Journal profiled his home search and the second thoughts he had about buying a home at what some considered the peak of that market.

This time, Green believes he bought at, or near, the bottom of the market.

“The market will hit bottom my suspicion is, sooner rather than later—I wouldn’t be buying a house right now if I didn’t think so,” Green explains. “My expectation is that the house I bought will fall in value next year but, over the long run, will be a good buy. The key is that we found a house we really want to live in. If you’re going to live there, the investment aspects really don’t mean very much.”

What was different this time was how carefully lenders scrutinized all aspects of the purchase. “I kind of suspected it wasn’t going to be easy, but I was a little surprised at how far the pendulum has swung,” Green notes. “Buying a home right now is more difficult than it’s ever been before. There is lots of documentation. Investors are very wary of California at the moment.

That will change, but I don’t know when. I just hope the pendulum settles at the right place, where it’s reasonably easy to get credit for a well-documented income and appraisal.”

Roger Cruzen is a freelance writer.