Tom Davidoff, Sauder School of Business, UBC – Clarification

Following up on a post from yesterday, this e-mail exchange between Tom Davidoff and vreaa took place 2 Dec 2011. Tom left it up to us to decide how to best clarify his position for our readers, and we’ll do that by simply recording the exchange here:


I have gotten some hateful and threatening email from followers of your blog, so I thought it might be helpful to shed some light on the interview with ctv that you cite. I believe you have interpreted my comment on camera as answering the question: “what do you say to people who believe the current price level does not reflect fundamentals?” That is not the question I was answering when I made my remark about entitlement. Later in the interview, in fact, I said that I would be reluctant to buy at current prices for investment purposes. I would not be surprised by a large correction in the next year or two. I also would not be surprised if real prices are higher in 10 years than they are today. The question I was answering was closer to “what do you say to people who believe they are entitled to own a home?” I don’t recall the exact question, but my point was just that it is not the end of the world if some people are not able to buy (as opposed to rent) the home in which they want to live. Should the government take steps to promote greater housing supply? That’s an interesting question, but not the one I was answering.

I would be delighted to discuss further.

Tom Davidoff

Dear Tom:

Thanks for the e-mail.
At their website, ctv still has an article up by Darcy Wintonyk that states the following:

Tom Davidoff of the UBC Sauder School of Business said that young Vancouver couples simply don’t have a right to own a home in the city they grew up in. “There’s not going to be any free lunch in Vancouver. There’s no entitlement to own a nice home in the most beautiful place on earth. So I think people need to be prepared just to accept that reality,” he said.
The economic reality adds up to a growing sense of frustration and hopelessness for an entire generation of Canadians.
On the upside, Davidoff said that renting isn’t the end of the world in this expensive housing market.
(end quote)

I think you can see how this reads.
If this doesn’t reflect what you said to CTV, and is substantially different from your main position on Vancouver RE, get in touch with CTV and tell them to change that.
This is a risk one takes speaking to the media.
You could insist that you refuse to be quoted out of context, without an opportunity to state your full position.
For instance, get them to include quotes such as:
“I would be reluctant to buy at current prices for investment purposes.” and
“I would not be surprised by a large correction in the next year or two.”
Those aspects of your position may come as a surprise to many CTV readers/viewers.

If you like, I can post the e-mail that you sent me at the blog, by way of your explanation of your position.
Or you could post it yourself as a comment.

Better still, why not lay out your entire opinion on the Vancouver RE market unambiguously, and I’d be happy to headline that as a new and separate post. That would be the best way of clarifying your position.
Let me know.

(vancouver real estate anecdote archivist)


Thanks for your reply. I think my original email to you conveys what I meant to say. I’ll leave it to you as to how to clarify for your readers. I don’t think I was quoted out of context by ctv. They were asking about people who grew up in the area and can’t afford to buy a suitable home in Vancouver. Whatever happens to housing prices in the next few years, the problem of people not being able to own the home they want in the location they want is going to persist. I agree that there would be fewer such people if prices were not higher than supply, demographics,and mortgage terms would typically support, and I told ctv that I think it’s likely that prices will fall in the short run, but that’s not what ctv was asking. I should add that in a market like Vancouver where supply is constrained and there is reason to think that there will be growing demand over time, it is not easy to know when or if a price correction is coming because it is difficult to do discounted dividend analysis. What are the correct dividend growth trajectory and risk premium to pin down a price based on today’s observed rents and riskless yield curve? “Not easy to know” is not the same as “it’s impossible to infer that there’s a high probability of a large price decline.”


Dear Tom:

Thanks for the reply.
By way of clarification, I’ll post our e-mail exchange.



See also ‘Tom Davidoff Knows About RE Cycles’, VREAA, 4 Dec 2011

36 responses to “Tom Davidoff, Sauder School of Business, UBC – Clarification

  1. David speaks for the 1%.

    For the problems of the 99%, business school(Law school) is not a place to go.

    Trying Sociology Department.

  2. Real observed rents have fallen by 1% per year for 30 years (this is UBC data):

    Why a risk-free yield? liquidity, concentration, argue for at least 200-300 basis points (depends who you are). Things do get silly with real 10y at zero though.

    There’s a broader frustration (hate?) at the lack of scholarship on #vanRE in general. Where are the UBC profs? Impotent: too much personal wealth at stake.

  3. By and large, our Professor here is the root of the problem we are facing today.

    When human is reduced to a number too often…….

  4. whoever send him a threatened email: get a life. his opinion does not agree with you, so what! then whatever Tom said is true that it hurt you people so bad that you reacted like that? it’s very low.

    • Royce McCutcheon

      Have to say I agree: hate/threats = bad form + counter-productive.

      Would also agree with the sentiment though that UBC should be leading frank discussion on the social and economic implications of current real estate issues for this region. Too often, those tasked with academic inquiry on this issue seem to have little public profile beyond the soundbites they’re afforded on articles that fail to address underlying issues (recent efforts to discuss things like “generation squeeze” excepted).

      VREAA previously posted a link showing current faculty having discussions about the impact of this region’s high cost-of-living on new faculty recruitment. Is it such a stretch to think that those at this institute would be able to see how this situation reflects wider truths for the region? Shouldn’t our academic leaders – PARTICULARLY those with expertise in fields attached to real estate and business – feel compelled to be drivers of productive conversation on this topic? There has been a gaping void in the public conversation about what this mania is actually costing us and it seems to me that we’re unlikely to get much beyond superficial concern from media, banks, politicians, and maybe even most people who would self apply the mantle of “home owner” given vested interests that have been well documented here in the past. I see a clear opportunity for academic leadership to positively impact society in this instance, yet no one with the credentials to be taken seriously seems to have the stones to step up and make it happen.

  5. dude, he mispelled your name.

  6. 4SlicesofCheese

    Prof says
    “I believe you have interpreted my comment on camera as answering the question: “what do you say to people who believe the current price level does not reflect fundamentals?” That is not the question I was answering when I made my remark about entitlement. ”

    He claims the question was
    “The question I was answering was closer to “what do you say to people who believe they are entitled to own a home?” ”

    Um, so reporters come to you because you are a prof at Sauder School of Business, so I would assume they want your opinion from an economic standpoint, not your sociological view.

    They would have went to another prof of sociology for that.

  7. 4SlicesofCheese

    Also if I felt like I was misrepresented by the media, I sure as hell would get that fixed, I guess he does not.

  8. “entitlement” is quite an emotional word, “expectation” makes more sense

  9. If I help to build/serve this community. I am entitled to live there.

    Our Prof needs to get his head a shake.

    • no, you’re not. Entitlement is a very strong phrase, and implies an unencumbered right or legal right to do something. No one has an “entitlement” to live anywhere, except perhaps for natives to live on particular reservations.

      While you might feel you have a strong reason for living in Vancouver, you certainly are not entitled to have a home there.

  10. Renters Revenge

    The thing is this isn’t about entitlement. As a society do we not want to feed, clothe and house our own? Furthermore, does our social compact not at least imply fairness of opportunity? Do we not hold onto some semblance of a meritocracy? Why this keeps coming up as entitlement is beyond me. Clearly we have failed against our ideals as our broken real estate market does not provide equality of opportunity when it comes to obtaining property, building wealth, and ensuring personal security.
    Mr Davidoff even with his “clarification” is expressing a troubling sentiment which is: “I take care of me and to hell with the rest of you”. If this is the sentiment being taught at the UBC School of Business I’d have to question what exactly they are teaching over there. You would think any business program worth its salt should recognize the problems associated with speculative bubbles, concentration of wealth, and restricted markets.

  11. Perceived versus actual risk. I’m sure investors can tell the difference. 😉

    Media quotes always need some context. If you want any proof why the media is part of the problem, despite its best intentions, Tom’s exchange has provided ample evidence.

    • Royce McCutcheon

      “I killed Earl Milford”

      Given the Bluth family business, I’m actually shocked that there aren’t more Arrested Development references on this site.

  12. “… hateful and threatening email from followers of your blog.”… – Prof. Davidoff

    Fascinating. Seriously!??? Why… hmmm?… Wait just a minute now – why, why…that’s practically tantamount to saying that VREAA enjoys a larger audience than CTV GlobeMedia (presupposing, of course, that both audiences are equally capable of/predisposed towards vitriol and/or that Prof. Davidoff’s PenPal detractors didn’t specifically self-identify as DearReaders ‘o VREAA).

    Well, regardless, points to Prof. Davidoff for at least taking the time to engage with this forum… now, as to, “What are the correct dividend growth trajectory and risk premium to pin down a price based on today’s observed rents and riskless yield curve? “… how about a little disambiguation – if we’re really interested in predicting the future vector/velocity of YVR RE, the better questions to ask are: who’s buying; why are they buying; what and where are they buying; and, the 64k$ kicker, how are they paying for it? [it all ‘unpacks’ from there]…

    Heck, now that was so easy, even a…

    [SmashCut To: SauderBizSchoolFacultyLounge]

    • Too many questions, Nemesis. I’ll reduce it down to some good ol’ Irish bluntness, sans inflection:

      “So… how do I make my money?”

      • I’ve asked that question before, Jesse [although not lately, and I may have rephrased it along the lines ‘o, “GorgeousBoodles ‘O Dosh! – Now where did all that come from?”]… as for the Irish [fond memories, sigh] inflection is everything… The South/Republic is more lilting. All in all though, North/South – the ‘Leprechauns’ are elegantly/eloquently blunt.

        Among the finest orthopaedic surgeons, too (amazing what they can do with knees).

  13. Agree w/Royce above about hateful and threatening email — not productive.

    I hope UBC will consider hosting a forum on housing affordability and urban design here that would include speakers from the university (economists, sociologists and so on), urban planners, builders, City politicians and people from all sectors of the community.

  14. Thanks “VREEA” for posting this. He did clarify his position, but he sounds like a politician.

    Re: threatening emails – that’s just stupid.

  15. I really wish people would stop using the BPOE moniker. Vancouver is not the most beautiful place on earth. When was the last time you saw or heard of someone pasting a picture of the Vanvouver skyline on their office wall because it reminded them of somewhere they’d rather be? Never. I bet there are literally millions of views better than that of overpriced rainy Vancouver’s mountains or skyline or whatever.

  16. The people who don’t live here entitle to live here. That is the problem.

  17. You know this entire exchange leaves thinking about a revelation I had a while back coupled with a meeting with my new CGA last week.

    I’m an unusual person in that I comprehend the world in a much different way than most people. To a certain extent we all have a completely unique way of observation but some people are a little odder than others. I have always tried to observe what other people do and tried to understand it, in the beginning to try to fit in, then later just to try to pass and function among others.

    I dabble in the stock market a little bit, at first with no success at all by buying “value stocks” as I could and trying to figure things out. Then I found this kind of financial instrument called warrants that I now trade in exclusively when I have the time. I do very well with them. When I found out about them and I was doing very well, I told my friends and my family about them. No one and I mean no one understood what I was talking about, even though I was explaining this simple concept in 37 different ways from Sunday. Finally I just gave up. You can lead the horse to water but you can’t make him drink, I was thinking.

    So last week talking to the CGA who also does investments he starts talking to me about investments and what I do. I tell him, I trade warrants, I do really well. He was kind of shocked. Then he tells me that less than half of one percent of professional stack traders understand warrants. A light bulb went off for me. I finally understood my total frustration with the friends and family members who didn’t understand. Just because it’s easy for me to see and understand something doesn’t mean it’s totally incomprehensible to someone else.

    So it goes with visual artists like painters, they see something that most of us never can comprehend and their world is vastly different than that of normal people. Just listen to them talk about different colours. For me it’s orange, for them it’s tangerine or carrot or tangelo or dark gold. When I try to comprehend them I feel colour blind.

    Then there’s VREEA and the people who agree with his/her views. We all see the freight train coming, for most of us we look at the income/value graph and immediately understand. For us it’s as obvious as the nose on our face. We intuitively assimilate and accumulate all the different data in our surroundings among our friends, families and in my case clients as well. But we’re shouting at people who can’t hear. They are as incapable of seeing what we see as we are incapable of not seeing it. For most of us, at this point, it’s cost us friends, esteem with our relatives, clients and so on.

    I’ve had other property managers call me at my office and tell me to shut up and offer me referrals if I would. I have the VP of REIN Patrick Francey trademarking my business name costing me thousands to get back, I’ve lost clients, been called negative and a dreamstealer, all for saying what is to me completely obvious. Yet, I still feel that need as an ethical moral person to repeat over and over again the warning that you should only buy income properties that pay you and that it’s not a good deal to buy a house right now.

    I guess the whole point of this long arduous comment is don’t get angry because other people cannot see or understand what you are talking about. I feel your frustration, but I have no solution to the problem of this way of seeing that is different. Just do your best to spread the message. Just because Tom Davidson is a prof at UBC doesn’t mean that he is as lucky (or cursed) as us to see this coming.

    Live long and prosper!

  18. cursed, yes, lucky, doubt it.

  19. Interesting. “Threatening” emails aside (really?), dude still comes off as a bit of a [mild expletive deleted. -ed.].

  20. If you don’t want to get negative / hateful emails, don’t make inflammatory statements in front of a video camera.

    By corresponding with VREAA, he’s trying to dig himself out of a hole. But I won’t be fooled by his weasel words. Calling Vancouver the “most beautiful place on earth” revealed his true colors: he’s a cheerleader.

    As the saying goes: Sauder is the best business school in Canada, just like Vancouver is the most tropical city in Canada. But you don’t have to take my word for it, just look at the stats.

    Average salaries of Sauder students. Pre MBA: $33k. 4 years Post MBA: $92k.

    Average salaries of Harvard Business School students. Pre MBA: $79k. 4 years Post MBA: $210k.

    • “Calling Vancouver the “most beautiful place on earth” revealed his true colors: he’s a cheerleader.”

      TRUE THAT.

  21. For IllustriousEd…

    “We see the dark underbelly of the world,” says Tamara Littleton, the CEO of London-based eModeration, a 160-person community management firm with $7 million in revenue whose clients include MTV, the Economist, and ESPN (DIS). ”

    [BloomBerg BusinessWeek] – Comment Moderator, the Dirtiest Job on the Internet

  22. southseacompany

    So, according to Mr. Davidoff, people who actually work for the money they earn, producing things or providing services, are asking for a ‘free lunch’ when they actually want to be able to purchase a home for themselves and their families.

    But, someone who parks their money in a concrete block and sees it double, without actually working or producing anything, is not getting a ‘free lunch’.

    Mr. Davidoff seems to have a very unidimensional outlook.

  23. UPDATE:
    See also ‘Tom Davidoff Knows About RE Cycles’, VREAA, 4 Dec 2011

  24. southseacompany

    Yes, I see he admits there could be bubbles, or a drop in prices. But, the unidimensional outlook I was really referring to was his comment on ‘entitlement’, which he admits his ‘free lunch’ reference was addressing. Who is getting the ‘free lunch’, can be interpreted in other ways.

    • Davidoff is a smart guy.
      His “free lunch” comment is bang on the money. It certainly isn’t going to get any easier here in Vancouver no matter how hard it already is. For such a public statement he could have used a more diplomatic tone.

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