Human behavior at the center of housing and finance

On a quiet street in Northern Virginia, a house sits unsold. The owner refuses to budge on the asking price—one that is based on nearby sales but inflated by data from a market far stronger several years ago.

The listing lingers, neighbors notice, and before long, new sellers in the neighborhood raise their expectations too. For buyers stretched thin, affordability slips even further out of reach.

This is the kind of ripple effect that fascinates Michael J. Seiler, the John and Yvonne Whitcomb Endowed Chair of Finance and Real Estate at William & Mary’s Raymond A. Mason School of Business. Across a diverse body of research—from overpriced listings to short-term rentals, energy shocks, and mortgage forbearance—Seiler has built a career on showing how human behavior bends markets in ways that data alone can’t explain.

“Behind every data point is a human decision,” Seiler said. “If we really want to understand markets, we have to understand the people shaping them.”

Seiler’s prominence in the field is evident in the recently released Real Estate Academic Leadership (REAL) Rankings for 2020-2024, where he is ranked number one among real estate researchers with 19 publications in the top three real estate journals.

The High Cost of Overpricing

Seiler’s research into so-called “essayers”—homeowners who set their list price well above market value—reveals just how powerful one seller’s decision can be. In a study of Orange County real estate listings spanning two decades, he and his co-authors found that 30 percent of homes go unsold, often because they were priced an average of $181,000 higher than comparable properties.

The effects spread quickly. Overpriced homes can drive up neighboring list prices by more than $40,000 and increase sale prices by over $37,000. Sellers, in other words, don’t just miss their own mark, they reshape the market around them.

“Overpriced homes don’t just sit quietly on the market,” Seiler explained. “They influence appraisers, agents, buyers, and automated valuation models (AVM) [like Zillow’s Zestimate], pushing neighborhood prices higher than they otherwise would be.”

That distortion makes affordability an even greater challenge, especially for first-time buyers. And it’s a challenge that connects to Seiler’s other lines of research which includes how people and policymakers respond when homes become increasingly out of reach.

Small Spaces, Big Potential

One response to affordability pressures has been the rise of micro housing—compact units, often 450 square feet or less, that pack all of the essentials into a fraction of the space. Seiler’s analysis of 42 projects across 11 U.S. cities identified five distinct types, from high-end luxury units to sharing-economy models.

The study shows that micro housing is not a fringe experiment but rather a growing part of urban development, shaped by demand from younger professionals, remote workers, and cost-conscious renters.

“Micro housing reflects both the pressures of affordability and the possibilities of innovation,” Seiler said. “The challenge is balancing livability with density as cities adapt to new lifestyle demands.”

Taken together, the research on overpriced homes and micro housing highlights the two ends of the affordability spectrum: speculative pricing that pushes homes out of reach and creative housing models that attempt to bring them back within it.

Airbnb and the Retail Ripple

A third piece of the affordability puzzle comes from an unexpected source: short-term rentals. While much debate has focused on Airbnb’s impact on housing costs, Seiler and his team looked at its influence on retail commercial property values.

Their findings were striking: a 10 percent increase in Airbnb listings leads to a 0.3 percent raise in retail property prices—roughly $2 billion in added value nationwide. Tourists renting in neighborhoods spend money at local restaurants and shops, which in turn drives up the value of those properties.

“Airbnb doesn’t just change where people sleep. It changes where they shop, where they eat, and how local economies function,” Seiler said. “That ripple effect shows up directly in retail property markets.”

But as with overpriced listings, the benefits are uneven. Larger, well-established retailers in tourist corridors gain the most, while small businesses and renters may see affordability worsen. Together, the studies of essayers, micro housing, and short-term rentals illustrate how the housing crisis is shaped as much by human choices as by supply and demand curves.

Crisis, Resilience, and Real Estate

Seiler’s research also speaks to how markets behave in times of crisis. During the 2021-2022 European energy shock, he and his colleagues examined Norway’s housing market to see how surging electricity costs influenced buyer decisions.

They found that homes in regions hardest hit by price spikes fell in value, particularly single-family houses. But energy-efficient homes, with better Energy Performance Certificates, proved more resilient.

“Energy costs aren’t just a line item on a utility bill anymore,” Seiler explained. “They’re now a central factor in how buyers value property and how resilient certain homes are in times of crisis.”

Even the introduction of electricity subsidies did little to stabilize home values. This lesson, Seiler suggests, is that resilience is increasingly priced into real estate, with efficiency becoming a hedge against geopolitical and economic uncertainty.

That same theme—how households adapt under stress—runs through his work on mortgage forbearance during the COVID-19 pandemic.

Mortgage Decisions and Moral Trade-Offs

The CARES Act allowed millions of homeowners to pause mortgage payments during the pandemic. But Seiler’s research revealed that more than half of those who enrolled did so not out of immediate need but as a precaution. Once enrolled, many struggled to exit because of uncertainty about repayment terms.

In parallel studies, Seiler explored how personality influences mortgage choices. Those who fit a “self-centered” profile were far more likely to strategically default or take forbearance even when financially able to pay.

Perhaps most striking, his experiments showed that simply requiring borrowers to pay a small fee for the right to pause payments reframed the choice. Instead of seeing forbearance as a moral failing, participants viewed it as a financial option—reducing the stigma while curbing abuse.

“Policy isn’t just about numbers,” Seiler said. “It’s about how people perceive fairness and opportunity. If you want a safety net to work, you have to design it with psychology in mind.”

Human Behavior as the Common Thread

From essayers inflating prices to homeowners hedging against energy costs or strategically entering forbearance, Seiler’s research highlights a simple truth: markets are made by people, and people don’t always act in strictly wealth maximizing ways.

For policymakers, lenders, and developers, that insight matters. It means affordability strategies must account for speculative behavior. Energy policies must consider not only kilowatts but perceptions of resilience. Relief programs must be designed with morality and psychology in mind.

“The ultimate goal is not simply to study the patterns of human behavior,” Seiler reflected. “It’s to inform policy and practice so markets become more resilient, equitable, and adaptive.”

In a world where affordability crises, geopolitical shocks, and economic uncertainty shape everyday life, Seiler’s work offers both explanation and direction. It’s a reminder that the numbers on the page only make sense when we understand the people, and motivations, behind them.