Haas NewsWire

Haas NewsWire, January 22, 2002

Housing Market Now a Buyer's Market, According to New Haas Research
Berkeley-Columbia Executive MBA Offers New, More Convenient Schedule
Haas Ranks #15 in 2002 Financial Times MBA Survey
Barbara Mellers Joins the Haas Faculty
New Staff
Haas in the News
Happening at Haas
Alumni Events

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Severe job loss and a decline in household wealth have turned the Bay Area housing market into a buyer's market, a situation that is unlikely to change until 2003, according to the latest research by real estate professor Kenneth Rosen and research associate Amanda Bishop at the Haas School's Fisher Center for Real Estate & Urban Economics.

Based on their report, "The San Francisco Bay Area Housing Market: A Buyer's Market," Rosen and Bishop consider some economists' predictions of a speedy economic turnaround and a strong Bay Area housing market in 2002 "overly optimistic."

The current economic climate has turned the Bay Area housing market into a buyer's market for the first time since the early 1990s. When the cycle has been completed, Rosen and Bishop expect home prices to have fallen 15 percent from their peak and luxury home prices to have fallen 30 percent from their peak.

"Even with the worst part of the current recession behind us, the effects on the housing market will lag about a year," said Rosen, the California State Professor of Real Estate & Urban Economics and chairman of the Fisher Center. "The Bay Area housing market will not bounce back until 2003."

The Bay Area saw extraordinary economic and job growth in the late 1990s, the report states, with employment in the area's six counties expanding by 13.2 percent, or 361,900 jobs, between December 1993 and 2000.

"It was clear to us, however, that the boom was unsustainable," write Rosen and Bishop. "The region's tech-heavy focus, which propelled the area's growth in the late 1990s and early 2000, contributed heavily to the region's economic downturn in 2001. As Nasdaq plunged, not only did hundreds of so-called dot-com companies lay off their staffs, but traditional companies that benefited from the Internet boom were also forced to downsize as demand for their products and services fell sharply from unsustainable levels." Bishop and Rosen expect the Bay Area labor force to contract a further 1 to 1.5 percent in 2002.

The housing market is further influenced by the contraction of household wealth. During the stock market euphoria that ended in March 2000, many young entrepreneurs became millionaires seemingly overnight, as ordinary Americans invested in record numbers in the stock market. This contributed to inflated housing prices. When the market crashed, housing prices declined, and many new homeowners who found themselves with a mortgage they could no longer afford put their homes on the market.

"The silver lining is that the Bay Area has become a homebuyer's market," said Rosen and Bishop. With mortgage rates at a 30-year low, Bay Area homebuilders and real estate agents report brisker activity in November and December (after a brief lull following the September 11 terrorist attacks). Finally, homebuilders report that the migration of companies and employers to Sacramento and the Central Valley, to escape the Bay Area's skyrocketing housing prices, has slowed.

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With recruiting of the first class of executives for the Berkeley-Columbia Executive MBA (BCEMBA) well underway, the schedule for the program has been refined to meet the needs of busy executives. The program is designed for senior managers with a record of significant achievements, demonstrated leadership ability, and substantial organizational responsibilities.

Program Highlights



The BCEMBA program combines the curricular, research, and professional strengths of two of the world's foremost business schools, the Haas School of Business and Columbia Business School, in a unique bicoastal curriculum that serves as a bridge between Wall Street and Silicon Valley, East and West. This distinctive program is geared to the needs of business executives from the US and other countries who want to master today's complex business environment, broaden their conceptual framework, and upgrade critical skills. Participants earn two MBA degrees, one from each university, and join an alliance of two vast worldwide alumni networks.

The information session schedule and online application are available at www.berkeley.columbia.edu.

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The Financial Times ranked the Haas School #15 in the world and #12 among US business schools, according to its latest MBA survey, published Monday, January 21.

Although the school dropped by one place from last year's #14 ranking, it ranked as the best public business school in the US. UCLA's Anderson School ranked #16, University of North Carolina's Kenan-Flagler School #20, and University of Michigan Business School #23. The full survey can be reviewed online at http://specials.ft.com/businesseducation/FT3S5ND9MWC.html.

Haas appeared to do well by its alumni. For this ranking, the Financial Times surveyed the MBA Class of 1998. An analysis of these responses showed that Haas alumni placed the Haas program sixth with regard to fulfilling their goals or their reasons for earning an MBA, and twelfth in terms of career progress.

Among the Financial Times' top ten listings in various categories, alumni ranked the Haas School's entrepreneurship program #6. Their information technology salaries were rated as the ninth best in the world. For a full listing of "Top Ten" categories, go to http://specials.ft.com/spdocs/FT35D1T8MWC.pdf.

Top 20 Business Schools:

1. University of Pennsylvania: Wharton
2. Harvard Business School
3. (tie) Columbia University GSB
4. Stanford University
5. University of Chicago GSB
6. (tie)Insead
7. MIT: Sloan
8. New York University: Stern
9. London Business School
10. Northwestern University: Kellogg
11. Dartmouth College: Tuck
12. Yale School of Management
13. Cornell University: Johnson
14. IMD
15. University of California, Berkeley: Haas
16. (tie) University of California, Los Angeles: Anderson
17. University of Virginia: Darden
18. University of Western Ontario: Ivey
19. Duke University: Fuqua
20. University of North Carolina: Kenan-Flagler

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Barbara Mellers has returned to the faculty of UC Berkeley. Seven years ago, she left the UC Berkeley psychology department, where she had been for 14 years, to accept a professorship in the psychology department at Ohio State University. She joined the Organizational Behavior and Marketing groups at Haas this spring.

Mellers holds a Ph.D. and a MA in Psychology from the University of Illinois, Champaign-Urbana, and a BA in psychology from UC Berkeley. Mellers brings with her over 20 years of experience in the study of individual decision making, judgment, and choice. Her research focuses on psychological models of decision making, the effects of emotions on judgment and choice, and perceptions of fairness. She is currently working on a study of California lottery winners and is investigating how windfall gains have changed people's lives.

Mellers is a consulting editor for the Journal of Experimental Psychology: Learning, Memory, and Cognition; Psychological Review; Psychological Bulletin; and the Journal of Behavioral Decision Making. She is also on the publications board for the Judgment and Decision Making Society.

Mellers' office is located in F586. Her phone number is 510-642-3811 and her e-mail address is mellers@haas.berkeley.edu. Her office hours are Wednesdays 2:00 p.m. to 3:30 p.m. This spring she is teaching a freshman seminar on Judgment and Decision Making and two sections of BA 160, Introduction to Marketing.

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Elizabeth Shook has joined the Marketing and Communications office as a senior marketing communications manager. She has fifteen years of experience in high technology marketing and corporate communications. For the past two years, she worked as an independent consultant for established high-tech companies and startups. Prior to that she was director of marketing communications at Geoworks, a local software company. She will be responsible for marketing the MBA, Evening & Weekend MBA, MFE, and Berkeley-Columbia Executive MBA programs.

Shook lives in San Francisco with her husband and son. She enjoys restaurants, travel, and scuba diving.

Shook's office is in S550. Her phone number is 510-643-9977 and her e-mail address is shook@haas.berkeley.edu.

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Janet Yellen, the Eugene E. and Catherine M. Trefethen Professor of Business Administration,
was quoted in the Oakland Tribune on January 20 in an article titled, "Bucking the Trend: Some
Companies Thrive Amidst Recession." Yellen commented on the importance of consumer
spending to revive the economy. Read the full text at http://search.newschoice.com/ArchiveDisplay.asp?story=d:\index\newsarchives\ang\angtr\bus\20020120\

Severin Borenstein, the E.T. Grether Professor in Public Policy and Business Administration, was quoted in the San Francisco Chronicle on January 20 in an article titled, "MTBE Ban May Choke Gas Supply, Raise Prices."

Reuven Lehavy, assistant professor in the Accounting Group, was quoted in the San Francisco Chronicle in an article titled, "The Enron Collapse: Why Auditors Weren't Likely to Blow Whistle," on January 19. He commented on the role of auditors.

The Haas School was mentioned the BusinessWeek Online article, "The Many Ways of Paying Your B-School Bill" on January 18.

Borenstein appeared on the CNN show "Special Report with Aaron Brown" on January 18. He commented on the California electricity crisis.

Terrance Odean, assistant professor in the Finance Group, was quoted in the San Francisco Chronicle on January 18. In the article, "Firm's Failure Ruins Retirement Dreams," Odean explained that many Americans don't invest in their 401(k) plans wisely by failing to diversify. Read the full text at

Kenneth Rosen, the California State Professor of Real Estate and Urban Economics and chairman of the Fisher Center for Real Estate and Urban Economics, was quoted in the San Francisco Chronicle on January 18 in the article titled "The Big Slide: Prime Office Rents in S.F. are Plummeting Almost to the Level of those in Oakland." Rosen commented that since the Bay Area economy is so tech-heavy it won't start to improve until the middle of 2003. Read the full text at

David Vogel , the George Quist Professor of Business Ethics, was quoted in the San Francisco Chronicle on January 17 in the article "Enron Got What it Paid For." Vogel commented that companies campaign contributions mostly buy them access to politicians, and don't guarantee policy changes. Read the full article at

Hal Varian, dean of the School of Information Management and Systems and professor in the Haas Operations and Information Technology Management Group, wrote an Op-Ed piece for the New York Times on January 17 titled, "Op-Ed: A New Economy With No New Economics."

Dean Benjamin E. Hermalin was quoted in USA Today on January 16 in an article titled, "Techies Turn to Public Sector." Hermalin commented that the school's social-entrepreneurship courses have seen increased enrollment.

The Haas School was mentioned in the SF Weekly story on January 9 titled, "Serfing the Web."

Pablo Spiller, the Joe Shoong Professor of International Business and Public Policy, appeared on the Public Affairs program of KDVS, the student radio station at UC Davis, on December 31, 2001, to discuss the economic situation in Argentina.

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The Haas NewsWire is the electronic news weekly for the Haas community published every Monday by the Marketing and Communications Office at the Haas School. Send your news, feedback, and suggestions to Haasnews@haas.berkeley.edu.

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