MBA Applications up significantly

Question

There is an interesting article over on BW. Judging by what is said its only going to be harder this year for everyone, especially our Indian friends...once again statements about how many of you seem to be applying these days. I think the internet and sites like this are part of the reason applications are improving like they talk about; you can find so much helpful info on how to put together a solid app now you really have no excuse for submitting junk with so much free info out there on the process. https://www.businessweek.com/bschools/co ... index+page

gixxer1000 · Answer

This may be a little off topic but I actually though the "brain drain" was the opposite. Where the talentend people from around the world come here to learn and then they dont go back to their original country which basically cenralizes the majority of the worlds talent here. I think is serves us better for these people to go back and spread the wealth of their knowledge in their own country.

riverripper · Answer

Today Bear Stearns announced it was cutting 250 jobs from their mortgage investing division. With this and all the recent hedge fund collapses I would imagine some people might not be too excited about entering the investment sector...especially anything related to real estate in the near future.

gixxer1000 · Answer

I dont think you can lump real estate into one broad category. Commercial and residential real estate are two different beasts altogether. The subprime meltdown doesnt really affect commercial real estate. And I doubt many people are getting MBA's to go into residential real estate.

RycherX · Answer

Hearing about the fierce competition, I'm glad I'm not Indian.

bherronp · Answer

The competition is pretty fierce no matter what color your skin is or where you were born for the schools you have listed. Its going to be a tough battle for us all.

saiyis · Answer

I agree that in a beguinning the subprime meltdown should not affect commercial real estate. The problem is that when expectations, liquidity and risk aversion get hit as is now happening in the current markets. Should there be more liquidity problems, increases in credit spreads due to an increase in risk aversion, among other things and /or an increase in unemployment due to a more pronounced slowdown in the housing sector (companies will find it more difficult to refinance due to higher spreads, some big companies have filed for bankruptcy and probably more will come to light) then this would not only have an effect on the commercial real estate sector (decrease in demand for these types of buildings, due to a general slowdown in the economy, increase in vacancy rates, etc) but it could also have a general effect in the economy, not only US but in the International Economy. I do not think it could lead to a recession or something close to that, but well, as a wiseman said "Economists are very good at predicting the past"

aviroop · Answer

The thing with the real estate mess is everyone saw the train coming a mile away - yet did nothing about it. The housing market was a mess last year and to patch up things, the sub-prime mortages were issued. Who in their right minds would issuse $600,000 loans to a person who wont even qualify for an American express blue student card? 
And thats what precisely the industry did - went where the moolah was, instead of stopping to think - "hey, does this guy even have money to repay the interest?"

I think the housing market is not going to cause the economy to slow down, set recession or take away MBA jobs. The damage has already been done. Now is the perfect time for poor souls like us who have been staying in rentals to swoop down and pick up that snazzy glam-mansion by the beach.

rhyme · Answer

Ah what a different viewpoint. I think there is more to come, the "correction" is not complete - forget subprime - the industry as a whole is overvalued, and I DO anticipate a recession, fueled decidedly by bad loans, overvalued property, etc.

riverripper · Answer

It was in the our local paper this weekend that property values are continuing to increase (mind you this is a coastal area that is deemed overvalued). Almost everything sold is still going for within 5K of asking and about 25% of houses sold go for asking price and another 25% of houses sold went for above asking. Sales of everything except the low end of the market that is where first time home buyers are shopping are still selling well. The issue now is people can't get 100% financing but if you have 10-20% saved up then its still easy.

The next street over from my house has one side on an inlet and the beach is about a mile away...trust me those beach front mansions aren't going down in price at all. They are still increasing at an insane rate because most aren't peoples first homes, its either vacation homes or retiring people moving into them. Sales around here are down slightly but its the bottom of the market, the people that can't get loans not the people buying the million dollar house on the water.

In the end we are going to school at a great time because the economy will hopefully be rebounding in two or three years and then we can cash in on that. Though I wouldn't get your hopes up about buying that beach house anytime soon.

kryzak · Answer

I'm just hoping the market doesn't "correct" itself in the SF Bay Area until I get into a school and sell my place! I'm banking on the price growth over the past 4-5 years to fund my MBA!

aviroop · Answer

Very interesting answers - good to hear from you guys.

I was on the lookout for a condo in downtown LA for some time and in 2004, the average asking price was hovering around 300k. By 2006 the prices were 500k. Now they are coming down to 350k, with some places offering some heavy discounts, parking spots.. etc etc.

Unless I hit the powerball, there is no way that I will buy that mansion, but I was doing some casual apartment shopping in LA south bay and was surprised to see that prices had fallen a lot.

I am under the belief that its a region specific case. In Las Vegas, my brother was telling me, there is so much of a housing glut that its really hard to actually decide which house to buy!

In the meantime, long live my rental ghetto

kryzak · Answer

Wow, 300 to 500 to 350?? Maybe I should sell my place now the second I get into a B-school!

rusk521 · Answer

Sorry for drifting away from the main topic at hand... 
Does anyone know what kind of an effect a recession will have on the total number of applicants applying to B school? I've heard different opinions from people that I feel aren't the most credible. I think statistics show that law school apps go up during a recession, but is it the opposite for business?

Another question... Even if the economy stays strong and avoids a recession, does anyone think the number of applications will continue to increase at an aggressive pace like they have been the past few years? Or perhaps it will be like the housing market and one day pop, giving people with lower quality applications a chance to get in? I find my last question to be a little absurd, but I felt like throwing it out there for the heck of it.

riverripper · Answer

A huge downturn in the economy could go either way. A lot of people might decide that its the perfect time to take a break since they wont be getting bonuses and their jobs may be at risk. On the other hand people may be afraid to take on 100+K of debt over two years if their job prospects are not very good coming out. It could very well be that some segments increase drastically and others increase drastically. Bankers may flood schools because of a horrible market meaning all those long hours aren't paying what they used to so its a good time for a break. Where as people with very secure jobs and good pay may be weary of leaving a stable position for an unknown and a lot of debt.

gixxer1000 · Answer

I read somewhere that through a downturn in the economy ususally a lot of career switchers go to b-school. Especially the ones who's industry is getting hit the hardest. They're already losing jobs and/or income so they might as well pay to gain more skills that they can then take to another more stable industry.

dabots · Answer

i work in the public sector...does the us government ever downsize? :-D

kryzak · Answer

heh, usually the government related jobs get better during a recession... at least for aerospace...

riverripper · Answer

Ya its called reduction in force. When things go bad we privatize things. Where I work was over 8500 people in the late 80s by the late 90s it was down to 3000 people. Now we are back up to 4400. 

Also a couple years ago the military closed a lot of bases (BRAC), my base actually started on the list but was removed. If it had closed those 4000+ people would be out of work plus the 1K or so other people whose jobs were related to the base. My wife actually worked for IBM doing contract work with us so we both would have lost our jobs. 

The government has decreased in size at an amazing rate...it is half the size it was in the 80s. Now government contractors on the other hand are probably way up since the work load hasn't really decreased in most areas. There has been a huge push to privatize stuff which actually has ended up costing us more money and is resulting in huge security problems.

pelihu · Answer

I think I'm going to go with the opposite view; I do not believe there will be a recession (I said as the Dow was down another 150). The market reacted positively to the move by the Fed last week in that secondary rate. At the current level, the Fed has a lot of room to work with on the main Fed Funds Rate; they could loosen 4-5% (some 16-20 consecutive quarters) before reaching the historically low levels of 2-3 years ago. I think the Fed holds a lot of power over the markets, they have a lot of room to work with, and I don't believe they will allow a recession to occur. I do think they would welcome some correction to take steam out of things being driven solely by private equity.

kryzak · Answer

very true about the government and contractors. In the 80's my site went from 30k people down to 8k now... but it's growing again.

MBA Applications up significantly

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