Sunday, June 10, 2012

Conflict of Interest?

If you follow Real Estate in the Village on the Edge of the Rainforest, you are well acquainted with C. Tsuriel (Tsur) Somerville.

Somerville's official title is Associate Professor, Real Estate Foundation Professorship in Real Estate Finance Director, UBC Centre for Urban Economics and Real Estate.

(try saying that 3 times fast)

The Vancouver bear blogosphere prefers to call him "that real estate flunky from the UBC Sauder School of Business."

He earns that title because, as the media's 'go-to' guy when a 'non-partisan' expert opinion is sought, he seems to constantly come across as nothing more than a spokesperson for the Real Estate industry.

Take, for example, this quote from an article in the Globe and Mail last month.

As sales slump and listings soar, the Globe comes out with a story headlining "Cooler housing market no catastrophe."
To hear some people talk, one of the hottest housing markets in the world is experiencing a serious course correction. Prices are down significantly over last year. But what does that mean?

Tsur Somerville, the oft-quoted real-estate economist from the University of B.C., doesn’t see signs of a major real-estate story brewing. He actually holds a refreshing perspective on the local scene. He won’t even go so far as to say that buyers hold the advantage at the moment, even though supply far exceeds demand.
Critics content Somerville will NEVER go so far to say that it's a buyer's market, a viewpoint driven largely by comments like this one from a recent Vancouver Sun article titled 'Vancouver's Housing Market unlikely to face significant price correction - expert':
Although the Vancouver housing market may be out of equilibrium, a significant correction is not expected, said Tsur Somerville, director at the University of B.C. Centre for Urban Economics and Real Estate at the Sauder School of Business.
To those who watch Real Estate, Somerville is as R/E optimistic as every single rah-rah realtor who eternally flogs the 'it's a great time to buy' mantra.

So is all the criticism of Somerville simply sour grapes from the real estate bear blogosphere because the man, an expert in his field, won't come out supporting the outcome they foresee?

Or does Somerville actually have a bias toward supporting the real estate industry?

Last week a faithful reader passed on this interesting link to me (hat tip alexcanuck).

It's the website for the Sauder School of Business. Specifically the sponsorship page acknowledging those companies who provide significant funding to the Centre for Urban Economics and Real Estate.

i.e. The source of funding for Tsur Somerville's paycheque.

Toss into the mix the fact that the courses he teaches at the Sauder School of Business are:

  • Commerce 307 - Real Estate Investment
  • Commerce 408 - Real Estate Development

And you would be hard pressed to believe that someone who teaches you about investing in real estate or developing real estate - two field's where boundless optimism is crucial - then it's doubtful this person is going to come out and tell you the market is in trouble.

Besides... if he's telling you the market is in serious trouble, who's going to sign up to take his courses?

So what do you think?

Is there a conflict of interest... or at least the perception of a conflict of interest here?

I suspect in a poll of the bear blogopshere, the answer is all too obvious.


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Please read disclaimer at bottom of blog.


  1. Bingo... he's an R/E shill and nothing more. This just reinforces it.

  2. Personally, I don't care...

    "“Conflict of Interest” means a situation in which a UBC Person, or his or her Related Party(ies), has a personal interest that conflicts or could conflict with the UBC Person’s obligations to the University. Please note:

    The existence of a Conflict of Interest involves two elements: the UBC Person’s or a Related Party’s personal interest(s), and the UBC Person’s obligations to the University. Personal interests may include business, commercial or financial interests, as well as personal matters and career interests. A UBC Person’s obligation to the University is to act in the University’s interests, which includes acting in support of the University’s integrity and fundamental mission and avoiding circumstances that may undermine public confidence and trust. The University has many diverse objectives, which include many supporting commitments, goals and actions. From time to time these objectives, commitments, goals and actions may appear to be, or may actually be in conflict with one another. In such cases, the University’s overriding interest is that its activities are undertaken with integrity and in accordance with the highest ethical standards.
    Conflicts of Interest may be actual or potential.
    An actual Conflict of Interest is a situation where the personal interest actually conflicts with the UBC Person’s obligations to the University.
    A potential Conflict of Interest is a situation where the personal interest has not yet conflicted with the UBC Person’s obligations to the University, but might be expected to."

  3. This is what passes for academic integrity?

  4. Sorry that this is off topic, Whisper, and that I'm reposting it from VCI, where I just posted it. But I thought you'd be interested seeing as you are skepitcal about pre-sales:

    Finally dropped by the showroom at West … new towers on 2nd Ave between Columbia and Manitoba. After less than two full days they are… wait for it… 70% sold out. We were one out of three couples in the showroom, that’s how quiet it was.


    a) They are full of sh*t
    b) They sold them by phone to overseas buyers looking for a home for their cash rather than their ass.

    Here’s an interesting read on the “b” front:

    If it is indeed “b” and buyers abroad are still using “new” condominiums (as apposed to old condominiums) to invest their cash. That means we can look forward to endless inventory as there is no reason for developers to put on the brakes. A sold unit, is money in their pockets and more reason to keep building. One wonders what news they get over there of the 2nd hand condo market over here.

    I did play dumb with the sales agent and told her that I get “confused” looking at plans and would prefer to wait until it’s built. She bit. She said, “You pay a premium if you wait until it’s built.” I then said to her with all the excitement of a school girl confessing secrets to each other, “You won’t believe it but over in the Village, people aren’t getting that premium. In fact, they’re selling for less that they paid!” Eyes wide! Can you believe it!!!! How weird!!!! expression on my face.

    I watched her swallow hard.

  5. He's nothing more than a pimp for the Vancouver real estate industry. The fact that Vancouver MSM seeks this guy out for a perceived "bias" "educated" position further reinforces that everyone's in on the scheme. Global is the worst.

  6. His relationship with the local RE industry is as incestuous as the relationship of famous economist professors from Columbia U and the like with the banks prior to the GFC.

    I can't wait for this guy to be kicked out of that otherwise very good business school. It's a shame for UBC and Sauder to accept such blatant conflict of interest.

  7. Why not just call Tsur and ask him directly?

    I am sure he would be amenable as he is clearly comfortable with a public image. The big media are all known to clip a long interview down to a few sound-bites and I will bet Tsur has been a victim of the press more than a few times. We all know how that works.

    Maybe he would appreciate a more honest outlet.

    His email address is here....

    Write him Whisperer. Serious man. Maybe we should get answers right from the source. I will bet Tsur is a terrific interview especially if he knows he is coming onto a bear site.

    Lets all prepare a few questions. We can judge later.


  8. Google found this:

    "we say a housing market is in equilibrium when the ratio of house rents to prices equals the cost of capital for owning a house, which is the sum of the mortgage rate and out of pocket costs, then minus the expected rate of long‐run house price appreciation"

    and later:

    "we assume that the best predictor going forward of expected long run equilibrium house price appreciation is the historic rate"

  9. The problem here is public funding of universities. Why should my tax dollars go to pay the tenured salary of some douchebag like this?

  10. I agree. I wonder home many $$$ Polygon has steered his way.

  11. I have been a Realtor since 1984. Sold in 5 different areas throughout North America. I have listened to people like this a 100 times. I will tell you this, housing, like EVERYTHING, will crash. Whether its tulips, stocks, TV prices, currencies or trees they eventually topple over. Only because over the last 40 yrs, we have been BRAINWASHED to Buy, OWN a home and go in debt.