Markets Even Out Over the Long Term

Market fluctuations are the norm, but the real estate business has staying power.

April 1, 2010

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.

Lawrence Yun
Chief Economist and Senior Vice President of Research at the National Association of REALTORS®

Yun oversees and is responsible for a wide range of research activity for the association including NAR’s Existing Home Sales statistics, Affordability Index, and Home Buyers and Sellers Profile Report. He regularly provides commentary on real estate market trends for its 1.3 million REALTOR® members.

Dr. Yun creates NAR’s forecasts and participates in many economic forecasting panels, among them the Blue Chip Council and the Wall Street Journal Forecasting Survey. He also participates in the Industrial Economists Discussion Group at the Joint Center for Housing Studies of Harvard University. He appears regularly on financial news outlets, is a frequent speaker at real estate conferences throughout the United States, and has testified before Congress. Dr. Yun has appeared as a guest on CSPAN’s Washington Journal and is a regular guest columnist on the Forbes website and The Hill, an “inside the beltway” publication on public affairs.

Dr. Yun received his undergraduate degree from Purdue University and earned his Ph.D. from the University of Maryland at College Park.