Episode Transcript:  

 So there's been a lot of information in the media lately talking about the quality of data, the administration's willingness to listen to that data, and how data can really shape a lot of critical decision making across not only the government, but also our economy. So today we're gonna speak with an expert that can provide us with a lot of insights into that and a whole lot more.

Let's get REady2Scale.

Hi guys. My name is Jeannette Friedrich. I'm the Director of Investor Relations here at Blue Lake Capital. Joining me today is Dr. Richard Green. Dr. Green is the chair of the Smith Department of Real Estate Development and a professor of economics at the University of Southern California. In his role, he also serves as a non-resident fellow to the Urban Institute, which if you're not familiar with them, they are renowned, nonpartisan research Think Tank in Washington DC that provides data and analysis on topics such as housing, health, education.

Criminal justice and income security amongst other things, aiming to overall improve people's wellbeing and strengthen communities. So a very respectable organization. He also serves as a senior visiting fellow for the Brookings Institute in India. It's an independent Indian public policy think tank that works on economic growth and development, energy, resources and sustainability, as well as foreign policy and security.

In addition to this, he also wears a hat as a trustee for the Urban Land Institute, which is a global nonprofit organization that offers research, educational programs and advisory services to address issues like housing affordability and climate resilience. He's also the director of USC Lusk Center for Real Estate, and previously he served as senior advisor for housing finance at HUD as well as a director at Freddie Mac.

He's been a professor at multiple universities and he even served for a time as an analyst at the US Department of Energy. So Dr. Green has his PhD in economics from the University of Wisconsin Madison, and his bachelor's from in Economics from Harvard. He's joining us today from la So Dr. Green, welcome to the show.

That is one heck of a resume. 

It makes it sound like I can't really hold onto a job, doesn't it? But I've been in my current job for 17 years, so maybe I've learned how to settle down. 

It sounds like you have excellent time management skills to me. What is the secret there? 

I'm not sure that I would agree.

I have good time management skills. I just do what needs to be done, when it needs to be done. 

The urgency approach. I like it. I work that way. Yeah. Just in time. 

I'm a big fan of Deming's, just in time method,

excellent. In all seriousness, you've had exposure to a lot throughout your career path.

So I have an assortment of questions that I'd just like to pick your brain on today. So the first one is, when you're looking at the housing market through the lens of economics, what do you see right now as the single biggest. Force that is really shaping affordability. 

So are we talking about on the multifamily side or the single family side?

So let's just start. 

Excellent. Let's take both. 

Okay. So on the single family side there are a couple of issues. One, the most obvious one is interest rates. And when interest rates were in the twos, we saw house prices explode. 



And now that interest rates are in the sixes, house prices have not.

They're starting to come back in a little bit, but just a tiny little bit. So it doesn't take a lot of brilliance to know that a cheaper house of 2% interest is gonna be more affordable than a more expensive house at 6.5% 

interest, right? 

But there's something else that's going on that I think is more of a long-term phenomenon and that's people aren't getting married.

Interesting. 

And if you look at the home ownership rate among married couples, young, married, so if we look at 25 to 34 year olds we care about young people, right? By the time people have hit my age, they're homeowners. About 80% of us are homeowners. But a place that's really changed is among young people, the home ownership rate is declined dramatically.

But if you suss it out, you can see that among married couples. It's exactly where it was 25 years ago. It was about 60% among new people. Then it's about 60% among young married couples. Now, the thing is the share of people getting married has plummeted, particularly at a young age. And now to put this in some context, when I was born a long time ago, about 80% of households were headed by a married couple.

It's now about 45%. And marriage really matters to the home owning process for a couple of reasons. One is financial is what we observe is when people come into a marriage, they bring savings from both halves of the couple, and then they bring income from both halves of the couple. And that combination is what allows them to enter the owner occupied mar market.



For single people. It's not exact quite 50 50 'cause women don't get paid enough, but it's single people, it's, let's say they're a total income. Your single man, your total income is 60%, single woman, 40%. Much harder to achieve home ownership. But on top of that, if you're the sort of person who is likely to get married, it turns out you're gonna be better educated and more likely to have a higher income anyway.



The relationship between marriage and home owning tells us a lot about why affordability has become a big problem for so many people. The other thing is you really don't want to be a homeowner until you know you've settled down somewhere because it's expensive to buy and sell houses, right?

Real estate commissions are 6%. You have transfer taxes, you have title insurance, you have all this stuff. So it takes a while to amortize those costs. So you're not gonna want to buy a house until you know you're gonna live there for a while. Once you're married, you're I don't want to use the word stuck, but you're less mobile because you have to think about two people's location choices, not just one person.

And so on the owner's side, I think marriage interest rates really matter. I'm not going to dispute that, but marriage is the thing that really matters, like crazy. 

That is fascinating. So is it almost essentially that the fabric of some of the fundamentals of how our society is constructed has just changed?

Yeah. Yeah. It is I think the state of marriage reflects a whole lot of stuff that's going on. One of the other major changes that's happened over the course of my lifetime is, the share of women who have a college degree is now much higher than the share of men who have a college degree.

Again, young men, young women, that wasn't true 50 years ago. 



Women increasingly are not interested in marrying men who don't have college degrees. 



There's an economist in MIT named David Otter, who has done really great work around this. And so you have this mismatch in the marriage market and it's leading to a whole lot of other social.

Outcomes, lower fertility rate being another particularly important one. But that household choice, that housing type choice is another one. Now, if we go to the rental sector, it's, first of all, renter incomes tend to be low. 



But the other thing is we have seen rents increase much faster than the overall cost of living.

Going back. To about the 1980s. So if you look at the US between World War II and the early to mid eighties, rents and overall price index moved at about the same rate. So what we call real rents. Inflation adjusted rents did not change for that roughly 35 year period of time. We started seeing a big change in the mid eighties where rent started to rise more rapidly than, the overall level of inflation. Okay. So what was going on is before the mid eighties rents were rising less, incomes were rising much more rapidly, particularly in the middle class. And even lower working class incomes were rising much more rapidly than rents were. So affordability was improving.

So if we go back to the magic year of, I'm gonna say roughly 1974, pretty much everybody could afford a place to live. 



Then when we get to the 70 fours, we started having, loss of manufacturing jobs and so the income started to get hurt. But then starting in the eighties, we started rents going up and incomes particularly again, the lowering of the distribution flattening out.

So after years of progress on affordability, we had the opposite happen. Okay. Why did that happen? Two things. One is again, the trajectory of income. Among what I'll call the bottom two fifths of the income distribution slow dramatically. And there are three major reasons for that. One is was trade.

And I'm a fan of trade, but you are in denial if you didn't think it had an impact on a good number of people's ability to make money. 



Second, perhaps more important than trade is technology. Just machines replacing. Human being a John Henry kind of story. 



And then the third thing is, again, it comes back to marriage, is we go, we, economists are very romantic people.

And so we have this thing called the sort of mating. Okay. What does the sort of mating mean? It means that people marry people who are like themselves. And 60 years ago, what that meant is. You were from the same town, you went to the same high school, and it really had very little to do with your economic trajectory.

It was people would meet each other and high school sweethearts got married, and at that point you're probably not that clear about what the other person's economic trajectory was gonna be. And of course, most women didn't work, so you weren't even thinking about that. 

Now we're 

in a world where the people who are getting married are typically both earners.

And so again, they're still going into the homeowner market, but the remainder are not getting married at all. 



And so they have that single income that there, there's, and they tend to not be, have the educational attainment, and so their income is stagnated. Now, the income at the bottom of the income distribution has actually been doing better in the last decade or so.

But 

you've still had this soaring rent. So that gets to why is rent soaring? And it boils down to one reason, which is land costs. Now, we have not been great at improving how we build houses. Housing technology has not improved very much. I generally don't cite McKinsey, but they have a report that I really like and it shows that manufacturing productivity in World War II has gone up to something like 1100%, and agricultural productivity has gone up by something like 700%.

And construction productivity has gone up 10%. 

Wow. 

No, it, it costs more to build than it should. We have not done a good job of solving the problem, of building more efficiently. However, that problem is dwarfed by the fact that land values, particularly in coastal cities, particularly in most job rich places in the United States.

Have risen very rapidly, and I'm one of these guys who chuck it up to zoning and regulation 



Is you go back here in California in the fifties, we were building 70,000 houses a year in Los Angeles County. Okay. We're now building 20 to 25,000. 



Back in the fifties, you could pretty much do what you want if you were building.

That's an exaggeration, but only a small exaggeration. Now it takes a really long time to get permits, even after you get permits, to get things like your water and sewer hookup, your electricity hookup. And so the supply of land, which will become more scarce with time as cities become bigger, I mean it.

It is. I don't wanna describe all of this on regulation, but a good amount of it is just the fact that we are so much more heavily regulated and so there's less competition. And so if you have something that is, as we say in California, entitled, it's very valuable. And who's that cost gonna be passed through to?

It's gonna be passed on to. If you build an apartment. And now you know you can't build here in Southern California where we are, you can't build an apartment that pencils if you're not charging at least 4,000 bucks a month in rent. Yep. Okay. What do you need for that to be affordable? You need income of about $160,000 a year.



And we're fortunate in Southern California that we have a lot of $160,000 a year jobs here, but we also have a lot of jobs that aren't. And for those people who are making, a typical wage earner in Southern California is making about 28 bucks an hour, 29 bucks an hour. So just translate that to 60,000 a year.

That's not matching up even close to that $4,000 a month rent that you need in order to make something pencil. 

Yeah, absolutely. No, this has actually been fascinating. Because we have a lot of different guests that come on the show, but most of the time people are pointing to the same things.

And everything that you just said was completely refreshing because it's looking at data from a completely different direction and very insightful. A lot of factors that I hadn't even taken into consideration. That make a lot of sense, once you draw attention to them. So really very interesting.

Now, I'm curious to know because you get to work with the Urban Institute, which is known for putting out very clear non-partisan data under the current administration. Do you see. Space for this kind of evidence-based discussion to still shape housing policy. Oh, are you sure You want me to go 

there?

It's up to you. We can try to keep it partisan. Let's, okay, so let's, I'm just curious to know, because, yeah. 

So let's let's talk about the BBL s controversy. So I think that's a good place to start. 

Okay. 

And we're gonna have to leave the world of real estate a little bit in, in this conversation, if that's okay, but it's.

So the Bureau of Labor Statistics puts out an employment report every month. 



The report has revisions, and here's the reason why, is the government gets a data from a sample, and the preliminary sample is based on about a 60% response rate from the employers they sample. 



The second month, they get up to about a 90% response rate, which is almost like taking an entirely new sample.

I'm exaggerating a little bit. Okay. You know how they talk about in polls, margin of error? 



Okay. So because what the BLS does is they take much larger samples. Their margin of error is much smaller than what pollsters get, but it is still there. And they report on this margin of error every month.

You can go to their website and see what it is, and it's about 300,000 jobs. So that's to say the number of jobs that they count, they think they are correct. Within 300,000 jobs. Plus or minus hundred 50,000 jobs roughly. There's no conspiracy. There's no it's just that's the nature of the data.

And given the response rate that they get, and they're very transparent about it, it's right there. You can go right to the website. You can see their methods. Okay, we have a hundred, roughly 150 million jobs in the United States. A little more than that, but let's say 150 million. So let's think about what 300,000 means in that context.

Okay? 300,000 out of 150 million is, if I'm doing my math right, 20 basis points. Right 0.2%. So your margin of error on the number of jobs that you are estimating every month is 0.2%. And it's real. It's there. We don't know to the last job. We don't know exactly how many jobs there are. What happens is the new sample comes in and they make a revision, and sometimes their revision is a couple of hundred thousand.

It doesn't surprise me in the least. Could we do better? Yeah. How could we do better? We could bring more technology into how we collect data, but that require Congress to pass a law that would allow BLS to have the money to do that. 

Yeah. 

And putting your money, when I was at HUD we had the same problem.

We had really bad technology, and for years and years, Congress didn't wanna fix it. They didn't wanna spend the money. 



And we did the best we could. And I don't know why I say we, I really didn't do any of the work, but the, the folks there actually knew what they were doing. They were doing the best they could given the constrained circumstances that they were under.

Yeah. Now the good news is ultimately, and I'll give the first Trump administration, got through Congress the money to improve the technology at hu. So I think FHA is on a much better platform now than it. Than it was. You ask that, does this administration seem open? I did see today that the person they nominated to run BLS, who I did not think was particularly interested in transparency has been withdrawn.

And I I should double check that news. But that's I. 

Yes I saw the same story. I confirmed. Okay. Alright. With October 1st. So I think that's, 

the administration has told us all we need to tell about us about their view of transparency in data. 

When President 

Trump last week said he wants companies to stop reporting quarterly earnings.

Okay. Yeah. 

Now, one of the things about the American economy that I've always found remarkable is its resilience. And I think one of the reasons it's so resilient. Is because people trust us. And the reason people trust us is we do have world class financial reporting. Both in the private and the public sector.

And as someone who's worked with data from other parts of the world, this is not jingoistic, Americanism talking, we are the gold standard for data. And could it be better? Absolutely. But compare us to Germany, compare us to Japan, compare us to China. Compare us to India. We do a great job and again, both the public sector with our national incoming products, accounts, and our private sector with our financial reporting.

And yeah, we've had people cheat. En Ron, and you know what happens to them? They go out of business. 



And unfortunately people get hurt along the way because, and it's the financial reporting was wrong. Yeah. It shows how important strong financial controls are. So I'm just gonna leave it at that.

When I see the president of the United States see we need weaker instead of stronger financial reporting, I see a guy who's not particularly interested in knowing what evidence is in decision making. 

The reason that spurred me the reason that I was spurred on to ask the question was because what you were speaking to directly aligns with concerns that we actually have heard come from the administration.

For example, declining reproductive rates, right? And that actually being something that directly, ultimately ties into, marriages, which ultimately ties into affordable housing. So it's fascinating data and that's really why I was curious to ask the question is, is the administration open to the data when, or, maybe biasedly, they'll take the data that supports their stand, right?

But is the administration even aware of this, these data points, do these get spread far and wide and are they incorporated into debates and discussions about affordable housing? 

I just don't have any way of knowing the answer to that question. 

Yeah. Interesting. 

It is. I in the w admin, I worked in the Obama administration.

I'm a Democrat. Let's just put that out there. But I knew people in George w Bush's administration who I really liked and admired, and I thought they were wrong about stuff. But I really liked Brian Montgomery, who ran the FHA program. I think very capable. I John Weer, who also ran FHA for a while who was secretary of policy development research in George Herbert Walker Bush administration.

Amazing guy. A guy I admire a lot. So it's a very different world. For me, because I don't talk to anybody in the administration. I don't know anybody in the administration and. Boohoo for me. I'm not, yeah I don't wanna sound like I'm whining too much, but I, it occurs to me as you ask the question, I could have answered it much better with the last two Republican administrations than I can with this administration.

That's unfortunate. That's unfortunate. But, I'll steer us away from here and look at to some other experiences that you've had that we might be able to draw a little bit more from. When you know, you've worked with the institution, like the Urban Institute in Brookings, India, are there international housing policies that you see that could be actually adapted successfully here in the us?

Is anybody really doing it better than us? 

Yeah, that's a great question. India, the context is just so different from ours. That I don't know that there are particular lessons to be drawn, Al, although I will note one is if you think regulation is one of our problems, and I do and I'm what I'll call an Ezra Klein abundance

Yeah, absolutely.

You really can't just remove one and hope that's enough. And I've been doing a lot of work in India where we look at if they remove a regulation, does that solve the problem? And the answer you really have to do systemic reform. 

You 

can't just say, okay, we think this is a bad regulation, this went over here, and so let's get rid of it and see what difference it makes.

And the other thing is, if you don't have willingness on the part of civ civil servant to implement. Reform doesn't do you a whole lot of good. So I guess there are some lessons from India. The places of the world that people look to when it comes to housing are as models of housing that people can afford are Vienna and Singapore.



Now, and people talk about their public housing. They don't exactly have, they have what I'll call quasi-public housing, but I wanna. Dispose of Vienna fairly quickly because when I talk to the people in Vienna, what I learned from them is Vienna did very well for a long time, and they did.

There's no game saying that because the population of Vienna was declining, and so when demand is falling, it's way easier to keep housing. Of course, yeah. Uhhuh and now Vienna's become a really hot city in Europe. Metaphorically, how do and now they're funding, they're having a really hard time dealing with having enough housing people can afford.



Good thing. Just briefly I'll mention about Vienna is people in Vienna, in particularly in Europe in general, are willing to tolerate much smaller houses than Americans seem to. A typical European lives in a house that's about half the size of the typical American House. And in fact, if you look at differences of GDP between European countries in the US.

One of the biggest differences in terms of consumption is we just consume so much more housing than Europeans do. It's not a criticism, maybe they're either Europe or us, but it is a, from a mindset standpoint is what is acceptable level of housing. It's very different in Europe than it is here.

Interesting. Paris for example, has housing that a lot of housing people can afford, but it's tiny. It's three, 400 square foot units. And I don't imagine, I guess people do that in New York. 

All the time in New York, but even amounts of money. Yeah. Pardon? For ludicrous amounts of money too, for ludicrous amounts of money.

Yeah. 

But then they tend not to stay in them when they get older. Whereas I think Parisians will stick around because, to them the value of living in Paris is more important than having a bigger house. The place I find really fascinating in Singapore, Singapore is a place I have been going for about, I guess 20, 25 years now.

And the government even invited me to be part of an advisory group last last year. And so I have some reasonable familiarity with the place. And first of all, I went to Singapore expecting to really dislike it. And the first time I went, I came home grudgingly admiring it, is the way I would put it.

And now it's reached a point where I actually just, I don't grudgingly admire it. I admire it. 

Interesting. 

There's still things about it that make me uncomfortable, but what they have achieved is quite remarkable as an economy and as a provider of housing. So here's what they do. Basically, the government is a real estate developer and they keep land on ground leases.

So if you make an income of up to, I think it's about 150,000 Singapore dollars. And you're married and above a certain age that's not that old or single and above a certain age, which is not that much older. 

I 

don't have the exact ages in my head at the moment, but I'm gonna say it's if you're married in 25 or more, you're eligible.

If you're single and 30 or more, you're out. Something like that, you could buy a unit. Okay. And that unit is reasonably priced because you are on a ground lease that has nominal rent and it's a 99 year ground lease. 

Wow. So 

government is keeping the land to itself. And so you are basically paying for the construction costs.

And if you were to visit these units, you'd say by US standards, they're you'd call 'em probably B minus. They're certainly not a's, but they're not C'S either. Maybe, B minus C plus. 'cause they don't automatically come with air conditioning because their view is we're not gonna subsidize air conditioning and we don't have enough energy in Singapore, so we really don't want you to use air conditioning even though it's really hot.

But you can buy a window unit in, use that to Cool. 

Interesting. 

Okay, so at the same time they have something called the National Providence Fund where which is their version of social security. And between you and your employer, again, I don't remember the split, you're putting 35% of your income into this National Providence Fund.

Wow. 

So for us in America it's, we're doing 15, right? They're doing 35. But here's the thing, when you buy your house from this group called the Housing Development Board, you can dip into your National Providence Fund savings. In order to make a down payment and pay for the house. 

Wow. And as a 

result of that, many people really don't have to pay anything beyond their National Providence Fund withdrawal in order to buy the house.

Very interesting model. 

Yeah. On top of that, if your income is below a certain level, they will provide you with a subsidy beyond all of that. And the bottom line is the average person in Singapore spends about 22% of income on housing. 

Wow. 

It's in a city that, in the private, purely private market is one of the most expensive in the world.

So 

they've basically segregated this market. The key thing is because one is 85% of citizens and permanent residents live in this housing, there's no stigma attached to it. 



It's just how everybody lives. They have created housing that. It's easily accessible to one of the best metro systems in the world.

They don't want people driving either. It costs a fortune to drive a car in Singapore, which means, it's this little island with five, 6 million people. But if you do need to drive, because their roads are heavily told and they have congested pricing. If you need to get to the, so if I'm going to the airport from Marina Bay, which is where the hotels are.

And I have one carry out. I just take this, the metro out there, it's very easy. But if I'm like schlepping stuff, getting a taxi, it takes you 15 minutes to get there. It's very reliable. The point is, they have this whole planning infrastructure and subsidy infrastructure that allows pretty much everybody to live in a very decent unit, a very reasonable price with accessibility to jobs, which is another really important aspect about what makes housing affordable.

If you have a cheap house, but you have to drive a hundred miles to your job, you're spending so much on driving that the cheap house doesn't help you all that 

much.

Now, having said all that, they spend about 1% of their GDP every year on subsidizing housing. 

Wow. 

Because their view is that everybody should have housing.



And we can't make that happen without spending a lot of money doing it. And Singapore is well known as a very capitalistic place, very market oriented place. Again, well known for transparency, good financial reporting, very business friendly place. I don't think you'd find any business who say, oh yeah, the business environment's terrible here.

But they. Do see the importance of funneling their government resources to keeping people housed. And they do. Now the other thing they talk about is, you gotta work. 



That's a very, but they make sure everybody has a job. And, sometimes what are those jobs may not be entirely clear what people are doing, but you gotta show up and go to work every day.

But it is a model that I find fascinating. So here's the thought experiment I did. Is if you gave people vouchers sufficiently large to pay for the difference between 30% of rent, 30% of income and rent, people are actually paying. And it added up throughout the United States, and I took the American Community Survey and did this, it would cost about $270 billion.

Okay? Lot of money, right? US economy is a $30 trillion economy. 



So that's about 1%. So if we spent what Singapore spends without any, and we have to worry about dynamics, effects and so on, what we call, but if we spent what they spend on subsidizing housing. We pretty much cover it. 

Wow. This actually adds a lot of extra color too.

I don't know if you're familiar, there's a very popular podcast that comes outta Singapore called The Financial Coconut. 

Yes, I'm familiar with it. 

Yes. So I listened to that from time to time. And the, and just this background information now about Singapore and the way that it functions and, essentially the foundations, particularly at the housing market.

Is really fascinating. It adds a lot of interesting color to, other material that I've listened to from that show. 

If anyone in your audience has an opportunity to go there. Go there. I think it is a remarkable place. And I've had the good fortune to make friends there over the years, and again, my views of it have evolved over the years.

I think what they've accomplished is absolutely remarkable. The weather's terrible. That's the only, that's the only really negative thing I have to say about it now. It. 

A little spoiled coming from California. I'm be 

humid every single day. I call Singapore a two shirt a day city. Yeah. If 

oh yeah. You sweat right through the first and require the second. Yeah. 

Yeah. 

All right. Dr. Green, I have two more little questions that I'd like to get to before we do what I call the lightning round questions. So you opened the door to this a little bit earlier. And now I wanna come back to it and dig in a little bit.

Deeper. So you were talking about the inefficiencies of construction that we currently have. So I'm curious to know from your vantage point at USC, what innovation in real estate development do you think actually has some solid potential to change how we build houses over the next decade?

Yeah. So I think the thing that does have solid potential, but isn't there yet is modular construction. 



Techniques. And the reason I think it's not just an idea because, we've had companies start and fail in the United States doing modular construction is again, and you're gonna get tired of hearing about Singapore.

But Singapore, that's what they do, that's how they keep, so they deliver units for about 200,000 bucks each for a, I don't know, 12, 1300 square foot. And again, they are good. I would not call them high quality, but I would call them very good. Good quality. 

Yeah. Sufficient. Yes. 

More than sufficient.

Yeah. You and I would be okay living there. 



I don't know about you, but it, unless you're a high maintenance person, you would be high fine. Yeah. 

Living there. 

But the key thing, elements they have are scale. So basically they put it in order for thousands of units every year, which means it makes sense to build the kind of enormous factories that you need to build in order to make the pieces, the modular pieces.



And then they have really cheap real estate out in Malaysia, which is right across the straight from them. 



Which allows them to cite factories that are close by. And so shipping costs are not. Huge. So one of the things in the United States is, so let's say you put one of these guys in Texas where there's lots of land.



But then to ship it to California is a lot of money, right? Yes. So that just the trucking cost starts to eat away at those efficiencies you get from building at the factory. So I don't know exactly how this works in the United States, but I've just seen. You see these high rises built in Singapore in a very short period of time, and they're safe and they're, they certainly have things like sufficient numbers of outlets, good enough, electricity and plumbing and all that sort of thing.

And you see the possibility I think it's in the us somebody, if someone can work out the logistics of it here. 



But the other thing is you need that certainty of orders. You need somebody who's gonna say in this location. That's the other key thing in this location, you're going to deliver at least 15,000 units a year.



Because you need scale economies in order for this to work. Yeah. And so that's where I think the problem lies. But I also think somebody will figure it out someday. 

Interesting. Let's hope so. All right. And then last but not least, before I get to the lightning round questions you got to advise at HUD and you got to work at Freddie Mac.

What perspectives did those roles give you that most academics actually don't get to typically see?

That's a really great question. So I really value those experiences. I will say at Freddie, my time at Freddie. Led me to really understand the details of the mortgage market. 



And academics sometimes are not great at detail, so they'll have theories of how things are supposed to work, and those theories are valuable.

I'm not saying that in a snarky way. It is important to have these analytical frameworks with which to think about things, but then you will find when they hit the ground, there are hiccups that you really need to think about. 



How they work. And one of the things, for example, is in an economic model you might not see the need for mortgage brokers between the GSCs and borrowers.



The real world. You need brokers between GSEs and 

Absolutely. So I'll give that 

as that is an obvious and you need to understand what motivates the agents and economics has some great, some of the great literatures on principles and agents, so we do think about that kind of thing.

But really seeing how it operates, how it works, seeing where the problems are, where the incentives are misaligned 



Is really valuable. The other thing about my time with at Freddie, and I'll come to HU in a minute, is again, I just made wonderful friends who I learned a lot from. Just the greater the variety of people you get to talk to, I think the smarter you get to be and academics are really smart, but we can be within a bubble.

And I'm not just, that's true of all walks of life, right? So just getting out of your bubble and hearing different perspectives about how the world works is very valuable. 



The experience at hud again I loved my year there. Part of it was I did work at administration that was very open to using data to change minds about things.



Now you had to make a very powerful, you had a people do what they were doing. I'm very proud of the people I worked with there that I got to be among those people. It is something I will feel good about for the rest of my life because there were dedicated people, they were highly intelligent.

I thought there were people of great integrity. I think they showed me how to behave around other people and not be a know-it-all academic, but listen, and we worked on cool stuff. So I will, I worked on, implementation of DOD Frank. With respect to mortgage backed securities, and I was in the interagency group and I learned about how hard it is to work with, I think there were nine agencies involved.

How do you write rules when you have people coming from nine different agencies perspectives? 

Yeah. 

That was a great learning experience. And we came up with something that I think were sensible. I worked a little bit on the. Forecasting the housing sector for the federal budget for a group called ika.

And again, in the Obama administration. OMB was very driven by data in making decisions, but I also came to appreciate you can't talk to death about a number. And that you need to get the budget in. And so if you're focused on a number, you're allowed half an hour of conversation about a number.

Then you have to decide what number you're gonna choose, move on. 

And 

so that's this is not just about getting things perfect, it's about getting things as right as possible given the time constraints. Yeah. And know I could go, I could talk about what it looks like to meet with senate staff people 

Which 

I didn't understand before and what their motivations are. And it was an amazing learning. Experience for me. It's also probably the hardest I've ever worked. I would 



Much, I wouldn't be in the office this long, but I would pretty much start thinking about work at seven in the morning and stop thinking about work at 10 o'clock.

Yep. 

Yeah. And that's thrilling to do that for I was getting tired. I'll confess that, but it's thrilling to have all that on your plate. And feeling a sense of responsibility for it. So 

yeah, absolutely. 

Yeah I cherish that experience. 

Wonderful. Wonderful. This has been fascinating. I actually had five more questions I could easily ask you.

We'll have to have you back again. I talk too 

much, so 

No, this is good. It was insightful and I really appreciate it. It's very high value information and perspectives that I think will benefit a lot of our listeners. I think it's great. But before I let you go, I do wanna take you into what I call the lightning round questions, which are just five simple questions that I ask all of the guests on the show.

Okay. So are you ready? Go. All right, so when you're not, data crunching, what do you actually do for fun? 

Listen to music and cook. 

Oh, nice. Very good. Okay, wonderful. Now as far as a book or a podcast, if somebody really wants to sharpen their financial wherewithal, their investment skills, or even just maybe their knowledge on economics as a whole and maybe understanding better and more intrinsically how the economy actually functions, is there any podcast or book you would recommend?

Two. Enrico Moretti's book, the New Geography of Jobs. 

He does an amazing job of taking very subtle, important ideas about how cities develop and why they're valuable and makes it very accessible. I love that book. And the other is gonna sound really off the wall, but Anna Karenina 

say that five times fast.

What was it called? It's 

Anna Carina by Leo Tolstoy. 

Wow.

One of the greatest novels ever written because one, it'll just make you a better person to read it, but second, Tolstoy had a fascination with land economic. He had a correspondence with very famous land economist from the 19th and 20th century.

I'm a nerd, but I'm not that big of a nerd, so I can't name that. 

Give just a sec. Oh, Henry George, of course. Henry George who is one of the great thought leaders on land economics, Uhhuh Anson's kind of crazy idea. But anyway, everybody should re it. 

Wow, very interesting. I've certainly have not heard that recommendation on the show, 

but but the mere is a more conventional one.

Uhhuh if your listeners want to know what markets, how to think about what markets are gonna be hot and which ones are not, and what makes places valuable and what, it's an amazing book. 

Wonderful. 

And again, very easy, very accessible. And I think Enrico's a genius. We'll be happy.

Very 

nice. Okay, I will definitely check that out. Now also one of the things that, we like to talk about on the show is yes, we all wanna make money, we wanna have good returns. That's important to us, but it's not really just about the money, right? It's about being able to build and live, hopefully extraordinary lives.

So what is your advice to somebody that is focused on that goal? 

So I'm gonna say something really corny. 

Okay. 

But and I don't think my family would argue with me on this is your family is more important than your job. 



Because if you have a happy family life, you're gonna be happy. And if you're happy, you're gonna do your job better.

If you're gonna be miserable, what's the point? 



And and define family however you wish. That's none of my business, but I think I'm gonna just say more broadly, friends and family are what life is all about. 

Yeah. 

And if you don't have that, then what's the point? 

Couldn't agree more. I have my own saying, which is it's the people in your life that make it what it is.

So we are in alignment. Different phrasing, but same intended meaning. I absolutely agree. Alright, and then what is something fun or interesting about you that most people don't know? 

I don't know how many people don't know it, but I used to play music and make money at it. That was a long, Hey, I'm not good enough anymore.

But in high school and college, yeah I actually. Would play keyboards, I would play weddings, I would play I would accompany singers. I enjoyed doing that very much, but it's hard to keep it up when it doesn't pay the bills by itself. And it's hard to keep it up if you don't keep at it. The other thing I, is I have twin daughters who I'm very proud of, but everybody knows that about me, who knows me.

So 

that's Oh, nice. Very nice. All right. Very good. And then last but not least, Dr. Green, if folks wanna get in touch with you, how can they do that? 

Feel free to email me at R-I-C-H-A-R kg@usc.edu. And I love it when I use LinkedIn a lot, pretty much all the other social media I don't, but LinkedIn I find very civilized.



The way I describe it is TikTok is a club with bottle service. LinkedIn is a wood paneled and leather bar at a fancy hotel in London. 

Nice. Very nice. I would recommend LinkedIn take this clip and use that, for one of their promotional marketing materials or something. Very nice.

Alright, thank you so much. This was really interesting. You brought up a lot of information really that is just not often discussed or heard within the industry, so I really appreciated the perspective. It was fun. Thank you. Sure, Jeannette.

You're a very good inquisitor, so I really enjoyed it.

Good, thank you. And for those of you that invested your time with us today, thank you. I appreciate it. Make sure to leave us some comments, let us know more that you'd like us to dig into. If you know somebody that might be interested in this podcast, spread the word, help them improve their investment skills and their knowledge on the economy.

And in the meantime, be bold, be extraordinary, and just keep moving forward.

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