Professor Michael J. Seiler Honored with Prestigious David Ricardo Medal for Groundbreaking Research
In acknowledgment of his many contributions to the field of real estate, Professor Michael J. Seiler, the J. Edward Zollinger Endowed Chair Professor of Finance & Real Estate at William & Mary's Raymond A. Mason School of Business, has been awarded the David Ricardo Medal by the American Real Estate Society (ARES). This lifetime achievement award is among the highest honors bestowed by ARES, recognizing scholars who have made enduring contributions to real estate knowledge through extensive and influential research.
The David Ricardo Medal is awarded to individuals who have demonstrated a significant body of published research over a career spanning at least two decades. The honor is reserved for those whose work has profoundly impacted the real estate discipline, garnering widespread respect and adoption among academics and practitioners. Professor Seiler's career, marked by numerous influential publications, lectures, and contributions, clearly reflects these criteria.
"Receiving the David Ricardo Medal is an immense honor," said Seiler. "I am deeply grateful to the American Real Estate Society for this recognition, which celebrates my career and highlights the impact of my recent research."
In addition to this remarkable accolade, Professor Seiler has recently been in the spotlight for his pivotal research on housing market dynamics. His working paper, "The Lock-In Effect of Rising Mortgage Rates," co-authored with Ross M. Batzer, Jonah R. Coste, and William M. Doerner, has attracted significant media attention, appearing in leading publications such as the San Francisco Chronicle, New York Times, Financial Times, Washington Post and Boston Globe.
In collaboration with the Federal Housing Finance Agency (FHFA), regulator of the Federal Home Loan Banks and both Fannie Mae and Freddie Mac, this influential study explores the concept of "lock-in" across various financial decisions, including real estate. The paper examines how homeowners who hold fixed-rate mortgages substantially below current market interest rates are hesitant to sell their homes. This phenomenon, known as mortgage rate lock-in, is a key factor driving the current housing market's challenges.
Professor Seiler's research highlights that nearly all 50 million active mortgages in the United States are fixed-rate, with many having interest rates well below current market rates. This creates a strong disincentive for homeowners to sell, leading to a dramatic reduction in housing supply. The study finds that for every percentage point increase in market mortgage rates above the origination rate, the probability of a home sale decreases by 18.1%. This lock-in effect resulted in a 57% reduction in home sales with fixed-rate mortgages in the fourth quarter of 2023 and prevented 1.33 million sales between the second quarter of 2022 and the fourth quarter of 2023.
The reduction in housing supply has significantly impacted home prices, increasing them by 5.7%, surpassing the 3.3% decrease attributable to elevated mortgage rates. These findings show how mortgage rate lock-in restricts residential mobility, inflates home prices, worsens affordability, and exacerbates inequality, particularly affecting borrowers with lower wealth who cannot strategically time their sales.
"Our work's attention in leading publications underscores the importance of understanding these complex market dynamics. I am fortunate to collaborate with such talented colleagues. I look forward to continuing our efforts to advance real estate knowledge and address pressing issues within the field," said Professor Seiler.
Professor Seiler's award emphasizes his significant role in real estate research and highlights his ongoing impact on academic and professional communities. His dedication to the field continues to inspire and inform, shaping the future of real estate scholarship and practice.
