Vocal academic isn’t just an observer of Vancouver’s real estate industry – he’s part of it
Tsur Somerville’s institution has been sponsored by developers, and he’s done no peer-reviewed research into the city’s extreme unaffordability
Anyone hoping to get a handle on the mechanisms driving Vancouver’s eye-popping real estate market and the impact of Chinese money soon runs into the same problem: An apparent lack of data.
Data DOES exist (more on this later), but the supposed void has been filled with the opinions of a range of experts. And no pundit has been more enthusiastic than Dr Tsur Somerville, director of the UBC Centre for Urban Economics and Real Estate.
For years, Somerville, armed with a PhD in economics from Harvard, has been a driving force behind some key notions: That there is nothing terribly abnormal or bubbly about prices in Vancouver (where the average price of a detached house is about C$1.4million); that affordability is best addressed on the supply side with more development, and not by addressing demand; and that worrying about the impact of Chinese money is racist.
He added: “There's a long history on the West Coast of North America of worrying about some problem - whether it's low wages, venereal disease, the plague, whatever you want - and blaming it on the Chinese.”
WATCH: Vancouver’s unaffordability ranking 'unfair', says Somerville (2014)
Somerville’s colleagues at the UBC Sauder School of Business have also lined up in support. According to the REBGV’s account of the Centre for Urban Economics’ panel discussion, Dr Michael Goldberg, dean emeritus at Sauder, pondered whether Vancouver was actually unaffordable at all. “Remember that half of all sales are below the median price,” he offered. As for the impact of foreign money: “Foreign ownership is not a problem, it’s a solution,” said Goldberg.
Sponsorship and research
Now to the crux of the matter. While Somerville is enthusiastically cited - more than 100 times in the Vancouver Sun alone in the past five years - little if any mention is made of an important fact: His Centre for Urban Economics is sponsored by the real estate industry. And his job is to prepare people to join that industry.
He’s also delivered dozens of presentations, unhindered by the need for peer review. Here’s a sample of the titles: “Bubbles”, “Immigration and Real Estate”, “The Effect of Foreign Investment on Vancouver’s Housing Market”, and “Maybe the sky doesn’t have to fall”.
I began looking into Somerville’s relationship with the real estate industry back in early November last year, asking him for an interview about his research history, the centre’s sponsors and any personal funding he might have received from the sector (not to suggest corruption, but merely to establish whether any financial relationship existed).
He immediately sprang into action, albeit in an unexpected fashion: He fired off an email to my boss, asking for confirmation of my “claims” to be the South China Morning Post’s Vancouver correspondent and its former international editor, asking whether my employment terms were full-time or freelance, and even pondering whether someone with my purported background would be better employed in “London, Beijing or Washington” instead of Vancouver.
As for his credentials, Somerville cited his publication of 18 peer-reviewed pieces on a range of subjects going back to 1987, although none speak directly to Vancouver’s current affordability situation. He also listed an extensive range of non-peer-reviewed articles and publications.
“From over twenty years of research in housing and real estate markets, training in urban, real estate, and housing economics, careful observation of the local real estate market, and analysis of this market for interest, research, teaching, presentations, and in answer to queries from the media I believe that I have a perspective on conditions and issues in the local housing and real estate market, including affordability, that is grounded in expertise,” he said.
When the FOI response finally came on February 19, it wasn’t exactly illuminating. In seeking a list of the centre’s sponsors and their contributions, “we requested records from the Centre for Urban Economics and Real Estate,” said Courtney Waverick of the Office of the University Counsel. “The available records did not contain the information you requested.”
Waverick directed me instead to Brad Gamble, Sauder’s assistant dean, marketing and communications.
Gamble was prompt and quite helpful. He provided a table showing that the centre’s currently listed sponsors (Henderson, Grosvenor and the Commercial Real Estate Development Association) have provided C$33,200 since 2010. Gamble said outside sources provided 15.5 per cent of the centre’s funding, coming to C$10,216 in the most recent fiscal year. But it’s unclear who provided this since no funds were listed as coming from the aforementioned trio in 2014.
“There is no connection between Professor Tsur Somerville’s remuneration and any external sponsorship,” Gamble said, regarding Somerville’s salary of C$243,198. “Professor Somerville is a tenured professor at the Sauder School of Business, whose salary is paid entirely by the university.”
Gamble said Somerville “is not required to secure sponsors or do fundraising for the centre”. “However, in the past, to expand and improve the activities of the centre, he has reached out to external parties to help fund initiatives such as conferences and student case competitions,” he said. “There are no overarching conditions for sponsorship agreements for the centre.”
I asked Gamble last week about the other sponsors listed by the centre’s website in 2012. As of Wednesday, he had not responded.
A patina of academic impartiality
These levels of funding do not seem extraordinary - although I remain curious about the centre’s previously listed sponsors and whatever other funding Somerville may or may not have received. This kind of relationship between a professional school and its corporate benefactors would not be so problematic, were it not for Somerville’s frequent efforts to influence the debate surrounding housing affordability without the benefit of peer-reviewed research. It’s a discussion of major concern to his centre’s financial backers as well as his students and their employment prospects. And it’s being conducted with a patina of academic impartiality.
The academic wing of the real estate industry
Since I started asking questions about the Centre for Urban Economics’ links to the real estate industry, Somerville seems to have wavered on the role of foreign money in Vancouver’s market. “It certainly appears to be the case” that foreign money has been at play, especially the city’s west side, he reportedly told the Vancouver Sun on December 4.
But this comes after years of Somerville tarring those who fretted over the impact of Chinese money as ill-informed and possibly racist. His recent remarks are merely a case of shutting the stable door after the dragon has well and truly bolted.
Somerville, of course, remains entitled to his opinions and he’s entitled to share them, whatever they may be. But anyone considering their value would do well to recognise the Centre for Urban Economics for what it is: The academic wing of Vancouver’s real estate industry. And Dr Somerville isn’t merely an observer of that industry. He’s a part of it.
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The Hongcouver blog is devoted to the hybrid culture of its namesake cities: Hong Kong and Vancouver. All story ideas and comments are welcome. Connect with me by email [email protected] or on Twitter, @ianjamesyoung70.