Nino Pedrelli (1956 to 2023): Real Estate Economist, Developer, One Who Knew How to Live

 Nino Dante Pedrelli came to Wisconsin’s real estate program with a unique background and skillset. Given his prior education in engineering and business, and his already significant accomplishments as a developer, it was a no-brainer to admit him to our PhD program.  Once he arrived, we learned that he brought so much more to the table.  A slightly tamed Boston accent, a love of Italy that infected anyone who hadn’t yet made the trip themselves, a sly sense of humor, and a deep curiosity about anything urban or real estate related, but most especially, an ability to connect with people – this is the Nino that we were fortunate to know and, yes, love.  And as if that weren’t enough, if you knew Nino, you got to know Susan and Laura and Cara, and over time some of the extensions to their family, notably Laura’s husband Steve, and the newest Pedrellis, his beloved granddaughters Lina and Luca.

Cara, Nino, Laura and Susan, and friend -- circa 2010

Sadly, Nino was taken from us at an early age, after a long struggle with cancer.  You can read his official obituary here, including more family details.

Speaking of family, in 2021 Nino was visiting the Boston area, and he took me to see his family home in Arlington (Mass.)  One of the highlights was this bas-relief -- of Nino's mother, Thelia.  Some Italian workmen were staying with the Pedrellis.  Perhaps artisans would be a better word -- one of the workmen created this classical motif with Thelia Pedrelli as the model, in thanks for their hospitality.

Every PhD student caps their studies with a dissertation – a significant piece of original research that adds something to the body of knowledge in our field, and also demonstrates one’s mastery of research tools.  Most dissertations stick close to whatever the fad of the moment is, in terms of topic, model, data.  Not for Nino.  He painstakingly dug out data on real estate financial transactions from the 1850s and 1920s, rather than looking for a canned dataset to download and “torture until it confessed.”  These early bonds and warrants were the precursors to today’s CMBS and other derivative markets.  Nino brought modern time-series technology to bear on the problem, and showed how, and why, a century ago as well as today, “every real estate boom is followed by something else that starts with the letter B.” Let's take a quick look at some of the basic data:

Excess returns in mortgage bonds, Great Depression, from Nino's dissertation

Nominal returns in land warrants, 1850s, from Nino's dissertation

If you're like me, this introductory data from "Volatility and Performance Analysis of Two Past Real Estate Markets: Mortgage Bonds of the 1920's and Land Warrants of the 1850's" whets your appetite.  You can download Nino's entire dissertation here, for your perusal.

While he was resident at UW, Nino also showed his chops as an outstanding teacher.  If you want to learn more about something technical like urban economics or how to price a mortgage-backed security, geeks like Malpezzi or Shilling or Green are just what you want.  Nino could geek out with the rest of us.  But if you want to really learn development, well then, you want someone with experience in the trenches; and the ability to generalize and connect theory to practice and vice versa; and someone who knows how to teach those things effectively.  Dozens of students confirmed that Nino was that rare master of all three, someone who set a template for his own and today’s outstanding UW lecturers that ensure our students emerge with the right balance of education and skills to “hit the ground running.”

Nino working in the Graaskamp Center, circa 1998

After completing his PhD, Nino eventually decided to refocus on real estate development and consulting, and moved to Minnesota; but he continued to teach real estate finance and development at Saint Thomas, continuing to give back to another generation of students.

Nino and I became close friends.  We were delighted to find out that our Italian families were rooted only 50 miles apart, Nino’s in Parma, and Steve’s in small hill towns near Pontremoli.  Some blog readers might have been privileged to participate in Nino's annual Parmigiana Reggiano ritual, but not everyone knew the struggles Steve and Nino endured in the early days, cutting up an 85 pound wheel of cheese covered with a rind seemingly borrowed from a rhinoceros.  We tried every knife in the house, multiple saws, and guitar wire.  Eventually we got the hang of it, and by the time Nino left Madison he’d obtained a set of the “tagliagrana” knives that the pros use.  Of course, one wouldn’t spend an hour cutting up a wheel of cheese without sharing a good bottle of Montepulciano, which helped pass the time. Once you’ve got a share of the wheel, what do you do with it?  Everything! On soups, pastas, a few chunks with a glass of wine.  Nino also took Steve under his wing in the kitchen; every time Steve makes a variation of the risottos Nino taught him, Nino’s there again, in the kitchen in spirit, whether the rest of him is in Wisconsin or Minnesota or wherever he’s at now.

More "Reading for Life" News: Order Without Design is Now Available in Chinese

 

There's no better way to spend a morning...

"The more that you read, the more things you will know. The more you learn, the more places you'll go." — Dr. Seuss, I Can Read With My Eyes Shut!

Life has given me the opportunity to travel to more places, more countries than I could ever have dreamed of in my youth. But reading good books has long taken me even farther, to more countries, sometimes beyond earth; and into the past, sometimes into the future.  Hence today's edition of Reading for Life.

Urbanist Alain Bertaud's Order Without Design is one of those books that's taken me to places I've never been (Yemen, El Salvador, Haiti... ) and taught me more about places I know a little bit about (India, China, New York....)  I've written about the book, and about Alain and his wife and partner in a life of studying cities, Marie-Agnès before, you can find that post here.

Alain and Marie-Agnès Bertaud

Sadly, Marie-Agnès passed away at the end of September 2022 after a long illness. I learned a lot from Marie-Agnès, about cities and satellite imagery and urban design, and also about many other things that comprise a good life.  She, like Alain, has been a great friend to me and to my family.  At my earlier post you'll find links to some podcasts, and YouTube videos as well as some comments about the book.  I especially recommend the several interviews of the Bertauds together by their friend Devon Zuegel you can find there, which bring out some great stories of their life together as well as a lot about cities, their vital systems, and their inhabitants.

I will discuss the life and work of Marie-Agnès Bertaud Roy in more detail in a future post -- it's a topic that deserves more time and attention.  The other news I bring in this short post is that Order Without Design has recently been translated into Chinese.

If you read Chinese -- or know someone who does -- and want to order a copy, you can find out more here.

As it happens, about 25 years ago I wrote a book chapter that summarized a large literature on the "Economic Analysis of Housing Markets in Developing and Transition Economies," which Paul Cheshire and the late Ed Mills were kind enough to include in their Handbook of Regional Economics volume.

The original paper can be found here, but I mention it in this post because there is a Chinese version of this paper as well, which can be found here.

Their are obvious differences between Order Without Design and  "Economic Analysis" ..., for example they were written two decades apart, and mine reads like something written by an academic drudge, while Alain's is livelier and, in some ways, deeper.  But I like to think that in many respects Alain's book and my paper complement each other.  Read both and decide for yourself? 

Some readers of this post will have known one or both of the Bertauds, that is our good fortune. But whether you know them yet or not, read the book and check out the podcasts.  “Reading brings us unknown friends,” is as true today as when Honoré de Balzac said it a couple of centuries ago. Were he writing today, known for his "keen observation of detail and unfiltered representation of society,"  the author of La Comédie humaine would doubtless have much to say about social media as well as today's books, but would doubtless approve of some of the best of the lot.

Housing Policy ‘Recipes’: International Lessons for China? China's Lessons for other Countries?

 

Housing policies have been one of my central interests since I began my career in 1977. Several years later, while at the World Bank with Steve Mayo and numerous other colleagues, I began to participate in developing lists of recommended housing policies or areas for reform. An example of one of our shorter, earlier lists can be found in Mayo Malpezzi and Gross, “Shelter Strategies for the Urban Poor in Developing Countries" (World Bank Research Observer, 1986). In this list, summarized here, we suggested countries needed to focus on:

• Broader economic development of an unstable macroeconomy as preconditions for improving housing conditions;
• Provision of infrastructure at appropriate and affordable standards;
• Cost recovery for that infrastructure through efficient taxes and user charges to enable its full coverage and maintenance;
• The creation of systems of land information along with the legal and administrative framework for the operation of land markets
• Reforms that would move high-risk low investment in formal markets into the formal sector that facilitate finance and better bricks and mortar investment;
• Development of appropriate financial markets and institutions including mortgage markets but also finance for construction and development as well as for rental housing;
• The critical review of housing subsidies to direct them more efficiently and more equitably and to safeguard the public purse;
• Replacement of old-style public or Council housing with appropriately designed sites and services and slum upgrading projects that address the housing problems of low- and moderate-income households;
• Tenure-neutral systems that facilitate the development of private markets for both owner occupied and rental housing;
• Reform of regulations like building codes and zoning regulations, subjecting those to cost-benefit tests; modifying or removing inefficient and inequitable regulations while strengthening and enforcing those required for basic safety and soundness of housing and financial systems;
• Focus on upgrading rather than simply demolishing so-called slums;
• Understanding that public housing developers often simply displace private investment, in many cases at higher costs with poorer or even perverse distributional outcomes;
• And finally that all these recommendations be underpinned by careful data collection, research, and monitoring and evaluation of the programs and policies involved.

IMHO this 40-year-old list stands up reasonably well today, but certainly is subject to criticism and improvement. It’s a little general, no doubt any reader can think of important omissions, and a few of the recommendations are still hotly debated, especially those regarding the relative roles of public and private sectors.

This is not the first such list of housing policy recommendations, of course.  We can cite dozens of examples, some before and many since. To give just one additional example, when Shlomo Angel and Steve Mayo drafted the World Bank’s official housing policy handbook Enabling Housing Markets to Work in 1993, they put forward the following list of housing policy do’s and don’ts:

It’s a bit hard to read but you can find the full document here.  For now, note that our lists are getting longer; and this far from the longest such list we could dig up!

In 2015 my friend and colleague Prof. Susan Wachter of the Wharton School and Codirector of Penn’s Institute for Urban Research invited me to serve on a panel discussing Sustainable Global Urbanization  The panel included a number of other colleagues including Susan’s colleague and fellow Co-Director Genie Birch, Maruxa Cardama, William W. Burke-White, Bob Buckley and Marja Hoek-Smit.  The session was headlined by Columbia University’s Jeffrey Sachs. 

As I prepared my presentation and started to put together yet another list of housing policy recommendations I was struck, not for the first time, that while the lists had some utility they were getting longer and ever more unwieldy.  As lists, they didn’t have much to say about how to set priorities among many possible policy areas and interventions, much less how to modify them for a given country context.

This put me in mind of a classic short volume by Dani Rodrik, One Economics, Many Recipes: Globalization, Institutions and Economic Growth. Like any ambitious volume, when I read it I saw points of agreement and some I’d question; but I really liked that in a short volume Rodrik uses the development recipe metaphor to highlight a need to set priorities among many possible policy recommendations; and just as importantly, to modify them for particular country contexts. I decided to shamelessly steal Rodrik’s “recipes” metaphor for my own presentation on housing policies. 

(You can watch the presentations of all the Penn panelists here.)

A few years later I found myself preparing a modified version of the Penn presentation for my colleague Siqi Zheng’s course on China’s urbanization at MIT. As is my custom, I prepared a possibly overly elaborate PowerPoint deck which, with just a few later modifications, you can download here.

In the deck you’ll find a few comments about food but at least as many about housing policies; an elaboration of the “recipes” metaphor; and a number of suggestions for further readings on both topics (food and housing).  The focus of the deck is on China, of course, but many of the points are, I think, readily transferable to other countries with a bit of work.

Next steps? In due course I plan to turn this presentation into a long paper or a short monograph for wider dissemination. In the meantime do feel free to use any of these slides in your own teaching or other presentations. If you have time, let me know if you do so.  Comments and criticisms are, as always, extremely welcome.

Housing’s Contribution to Economic Development: Reframing the Narrative

 

On September 7-8, 2022, in Bethesda MD: The Way Forward Housing Coalition organized a conference to review the economic and social benefits of well-functioning housing markets, and how to chart a better path forward  in emerging markets and developing countries (EMDCs).  I was pleased to help the organizing committee flesh out the program, and honored to give the wrap-up presentation at the end of the conference.

The organizing committee included Richard Green and Marilyn Ellis of the USC's Lusk Center for Real Estate, Arthur Acolin of the University of Washington, Marja Hoek-Smit of the Wharton School and HOFINET, Monica Rashkin, Patrick McAllister and Patrick Kelley of Habitat for Humanity's  Terwilliger Center, and Malaika Cheney-Coker, formerly with Habitat and now with Ignited Word.

Details of Housing's Contribution to Economic Development – Reframing the Narrative can be found here, including the conference program, information on the speakers, conference partners, and some online resources including useful readings on the subject.

The proceedings were recorded, and you can find them on YouTube: Day 1, and Day 2.

These slides are based on my wrap-up comments for the conference, revised and extended. They are in PowerPoint, and many of the slides have discussion and links in the notes section below the slides.  There are a list of references in the notes to one of the slides near the end of the deck.

My comments and these slides were inspired and informed by my colleagues’ presentations, but they are not a comprehensive summary of all the lessons of the conference.  There is much more to be learned, and discussed, about each of the topics.  As always, feel free to use any of these slides in your own teaching or other non-profit endeavors.  Comments and corrections to these are always welcome.

"Financialization" and Housing: An Economist's Thoughts

 

For a slide presentation on "financialization" from an economist's perspective, with a focus on housing, please click here.

Here's a video with my running commentary.

Comments and corrections are always welcome!

Background on Ukraine: Some History, Some Current Events, Some Thoughts on Reconstruction

 

Shutterstock: Kyiv, July 2021. Photo by Ingus Kruklitis.

In early 2022, I delivered several introductory lectures presenting global perspectives on housing finance. As part of the last of those lectures I included a discussion of Russia's then-threatening behavior towards Ukraine. Our class discussed how the Russia-Ukraine conflict might spill over into the economies of Europe, the U.S., eventually the globe; and a few implications for real estate markets.

Our class met in the morning, and later that day, Russian troops invaded Ukraine.  In the past few months I've expanded the original teaching materials.  They include a little history, some discussion of the economics of Ukraine and Russia, with a focus on oil and gas markets.  Ukrainian housing markets and policies are discussed, as well as some thoughts about reconstruction.  A list of reading and links related to this topic are included at the end.

These materials are pitched at students and assume no familiarity with Ukraine or the region, and are presented in a very informal style.  Professionals and those who know the region well may still find some useful nuggets, especially in the discussion of reconstruction and housing markets.

Since the teaching materials have expanded, here they are presented as a stand-alone PowerPoint file. They are a work in progress. I am not an expert in Ukraine and I appreciate any comments or corrections those who are expert might provide -- especially from Ukrainians.

Update: My colleague Alain Bertaud recently spoke to a group of Ukrainian architects and planners on issues of reconstruction.  The presentation (in English, Ukrainian subtitles available) is a tour de force and is available here.  It is pitched to a higher level audience than my teaching notes, but is extremely accessible to students or anyone interested in the subject. Five star recommendation.

Urbanization and Climate Change: A First Look

 

iStock

On June 21, 2022, I joined 30 participants in a discussion of climate change, with a focus on cities and some of the lessons we can draw from urban and real estate economics, as well as the basics of environmental economics.

The (virtual) venue was organized by Hubert Beroche, of the Ecole Polytechnique.  Hubert is the founder of the school's URBAN AI think tank, which seeks to better apply emerging technologies to urban challenges.  One of URBAN AI's activities is its Emerging Leaders Program, which brings together a group of young scholars and professionals from diverse backgrounds, who participate in a program of lectures and hands-on projects designed to foster new approaches to urban technologies.

I was pleased to participate in one of the sessions, on Urban Economics and Climate Change, which combined lecture and discussion.  You can download the session materials here, a set of roughly 200 PowerPoint slides (what else? 😉)

The video of my presentation can be found here.

Comments and corrections are, as always, very welcome.