Interview With Andrew Hanson, Department Head at Stuart Handler Department of Real Estate

This week we continue our interview series with key voices and prominent figures in the US real estate field. This time, we connected with Andrew Hanson, Professor and Department Head for the Stuart Handler Department of Real Estate at the University of Illinois Chicago.

In this interview, Andrew discusses his path from public finance to real estate, offering insights into the intersection of urban economics, public policy, and housing markets. We explore his groundbreaking research on rent regulation, the unique opportunities UIC’s real estate program provides for students, and his thoughts on the future of the real estate industry in urban settings.

About Andrew Hanson

Andrew Hanson is a Professor and Department Head for the Stuart Handler Department of Real Estate at the University of Illinois Chicago. Prior to joining the UIC faculty in 2019, Andrew held faculty positions at Marquette University and Georgia State University.

Outside of academia, Dr. Hanson has worked in government at the Council of Economic Advisers, and as a consultant/contractor for the National Apartment Association, the National Association of Realtors, the Lincoln Institute of Land Policy, and the Pew Charitable Trusts Fiscal Federalism Initiative.

Most of Dr. Hanson’s research is at the intersection of real estate, urban economics, and public finance, where he studies tax policy for urban redevelopment and home mortgages, and discrimination in housing and mortgage markets in addition to other topics. He currently serves as an Associate Editor for Public Finance Review and Regional Science and Urban Economics.

Your research spans multiple fields, including public finance and urban economics. What initially drew you to these areas of study, and how do they intersect with your work in real estate?

My first research love was actually public finance, and that was initially what drew me to pursue a Ph.D. in economics. From my undergraduate degree, I went straight to a graduate program at Syracuse University that had a specialization in public finance. I was fascinated by the consequences of government action on the economy, and I became particularly interested in how government policies directed at urban areas and towards real estate markets change behavior about things like development, property values, and mortgage borrowing.

Syracuse also had a specialization in urban economics, which overlapped with my initial interests and drew me more into research topics at the intersection or urban areas, real estate markets, and public finance. The three fields intersect in a number of ways, but for me the most interesting is the policy dimension. For instance, governments have interests in pursuing policies directed at boosting home ownership or making rental housing more affordable and these have implications for how urban areas develop and certainly directly relate to the real estate market.

You’ve held various academic positions before joining UIC, and even served as a staff economist at the President’s Council of Economic Advisers. How have these experiences shaped your approach to teaching and research?

Some of my most memorable prior experiences that I carry with me in how I conduct research and teaching happened while working as a staff economist at the Council of Economic Advisers (CEA). One of the most valuable came during my first few weeks on the job when I was tasked with writing a memo about how the top marginal tax rate has changed over time.

I knew the material well and wrote a fabulously detailed account of all the top marginal tax rate changes since World War II. I had appendices, long explanations about the nuance in the rates across different types of income, differences across tax filers, anything that I thought was important I included. I enthusiastically wrote the memo up and hurried it off to my boss. About 20 minutes later, my boss stopped by my desk and asked me what the heck I was thinking.

He explained to me that the President would be reading my memo as part of his morning briefing and that is was completely unacceptable. Not because it was inaccurate, but because it was not written for the correct audience. My boss explained to me that I needed to write for the President — someone that absolutely needed accurate information, but could only spend about 90 seconds thinking about it. He instructed me that if I can spend an hour improving my writing to save the President 10 seconds of his day, that was exactly what I need to be sure to do. Oh, and that I should address the memo directly to “Mr. President”, that really brought the point home.

That experience gave me a great sense of how writing and research is viewed by an audience and that a writer/researcher needs to work diligently to help a consumer of their work understand it with as little effort as possible.

At UIC, you lead the Stuart Handler Department of Real Estate. What unique opportunities does this program offer students, and how do you see it evolving in the coming years?

The Stuart Handler Department of Real Estate offers the only Real Estate major at a public, research university in the State of Illinois. We are housed in the College of Business, offering students a real estate major or minor as part of a larger curriculum of business education.

While there is a lot about us that is unique, a couple of things really stand out to me. First, we have a faculty that is incredibly active in research in the field of real estate. Despite being a pretty new real estate department, we rank #18 among U.S. universities (#28 globally) in real estate research output. Our faculty are leaders in the profession, serving as editors at top academic outlets and in leadership roles in professional associations. Our research has been funded by grants or contracts from the U.S. Department of Housing and Urban Development, the National Association of Realtors, the National Apartment Association, and the Illinois Realtors Association, among others.

We have an incredible advisory board, led by Stuart Handler, that engages with both our faculty and students, and keeps us connected to industry in Chicago and beyond. Also, our students have been really successful landing jobs and internships at prestigious employers, including Jones Lang LaSalle, Cushman Wakefield, CBRE, and J.P. Morgan.

Our department and UIC Business in general are on a steep upward trajectory. We have ambitious, eager students and some amazing alums that I know will do amazing things in the Chicago real estate world.

You recently led a study examining the effects of rent regulation on housing and neighborhood quality. Could you share some of the key findings from that research and explain how rent regulation might un intentionally harm both renters and housing providers?

This was a really fun study to work on, as it was something that I do not think a lot of people think about when they consider the effects of a policy like rent control. I have a feeling that a lot of people hear “rent control” and they think something simple like, “sounds good, rent is so expensive, we could sure use some relief.” I think that is a pretty normal thought, but what it fails to consider is that such a policy might have unintended consequences. And in the case of something like rent control, those might be pretty important.

For the study, I examined the potential for rent control to have unintended consequences on the quality of housing units and the neighborhoods that surround them. I used data on rental properties from the American Housing Survey and looked at areas that had various degrees of the market covered by rent control-type policies. I found a pretty strong link between rent control and the unintended effect of reducing housing quality and the quality of the neighborhoods surrounding these areas.

For example, I found that doubling the number of rent-controlled units in an area is correlated with a 16.2% increase in the number of housing units categorized as being severely inadequate, and a 14.7% increase in the number of housing units that are moderately inadequate. I also find that rent control is strongly related to increases in interior housing deficiencies. For example, doubling the number of rent-controlled units in an area is correlated with a 25% increase in the presence of cockroaches and a 12% increase in units having broken plaster and chipped paint.

On neighborhood quality measures, I find increasing the number of rent-controlled units at the metropolitan area level correlates with reports of both petty and serious crimes, trash in the streets, and a decreasing perception of school quality.

Given your background in both academia and consulting for organizations like the National Association of Realtors, how do you balance theoretical research with practical real-world applications in the real estate industry?

Well, most of my research is empirical work, meaning that I try to find instances where something in the real world can provide hard data and be used to test a hypothesis. In some cases, this means looking at things like historic or existing policies and how they impacted markets, and in other cases I’ve used experiments to create my own data through interacting with people in the real world (typically referred to as field experiments).

Because a lot of what I’m interested in is what is actually happening in reality, and not so much theory, it leads to some natural connections with folks that are interested in the same things (like the NAR and NAA). I’ve always thought that it is important to be able to explain research, at least at some level, to people outside of academia.

Looking ahead, what trends or shifts do you anticipate having the greatest impact on the real estate sector, particularly in urban environments? How can professionals and investors prepare for these changes?

I have never been one for making very public predictions. It seems that every time I do, a surprise comes along and changes things. I try to teach my students about using models to make predictions about real estate markets, and to demonstrate to them when those models have been useful, but also times when something happened that was really out of the ordinary. I am thinking a lot about policy right now and hoping that decision makers will be thoughtful about how to meet challenges like affordability in the real estate sector, but be mindful of the potential for unintended consequences.