Markets Even Out Over the Long Term

Decisions about what to buy and when—by consumers and by businesses—inevitably lead to market fluctuations that sometimes can be forecast and sometimes not.

We see this volatility in the spectacular surge in home sales that closed last November when households believed the home buyer tax credit was about to expire, and then in the subsequent drop in sales over the next two months, after Congress extended and expanded the credit.

In the long term, however, broad trends can smooth out these short-term fluctuations.

With about 4 million births, 2 million deaths, and 1 million newly arriving immigrants in the United States each year, there will be a steady demand for homes over time. Historically, the net number of home-owning households rises by 1 million each year. The 2 million weddings and 1 million divorces each year also add to changes in living patterns.

Furthermore, home owners look for a new place to live every seven to 10 years on average. As a result, over the next 10 years, we can expect anywhere from 50 million to 70 million home sales.

Assuming that NATIONAL ASSOCIATION OF REALTORS® membership remains steady at today’s level of 1.1 million, there could be more than 50 transaction sides per member over the next decade, on average.

REALTORS® have different methods of doing business, so there will naturally be great variations in who will get more than average. One thing is clear, however. Real estate professionals will continue to be integral to those millions of home sales.

According to NAR’s most recent survey of home buyers and sellers, 80 percent say they’ll recommend their REALTOR® to other family members, friends, and colleagues. Over the long term, the transactions will be there; how many of those you get are up to you.