Keeping Demand High

From the Editor: 2006 is likely to be another good year in real estate with signals of strong household formation, immigration, baby boomers’ purchases of second homes, and so on.

January 1, 2006

As I write this, talk of the housing market peaking has reached such a deafening level, it’s a wonder you all aren’t out looking for new work.

I don’t mean to make light of the situation. The fact is, some real estate markets are slowing. (Others were never racing to begin with.) But as industry economists point out in our outlook, 2006 is likely to be another good year in real estate for all the same reasons we’ve mentioned before—strong household formation, immigration, baby boomers’ purchases of second homes, and so on.

Americans don’t invest in houses for the same reason they invest in stocks. Our homes are not only a great hedge against inflation but also an extension of ourselves. In fact, we’re constantly looking for ways to pour more money into them. I submit my very own elementary-age children as living proof. One of their favorite video games is “Animal Crossing” from Nintendo. The main object of the game is to decorate your house and pay off your mortgage. My kids especially love the feature that allows them to keep trading up to a bigger house.

When one of my favorite writers, Thomas Friedman, decries the fact that there are so many people selling real estate, I can agree with his view that we need to build our country’s brainpower in science and math but not see eye-to-eye with him about this industry. Simply, I believe in the law of supply and demand. Americans’ love of real estate will continue, and the demand for housing—and for your services—will remain strong.

If you are seeing a slowdown in your market, take heart. Many of our readers have been through a buyers’ market before and lived to tell about it. The magazine will do its part this year with articles on how to adjust your business strategies in a changing market.

Now, we just need to urge the government to do its part and keep its hands off the mortgage interest deduction. The deduction has been a part of our Tax Code for more than 90 years; it’s one of the cornerstones of our country’s mission to promote homeownership. And we all know how important homeownership is to building strong communities.

The Bush administration is currently considering a proposal that would replace the deduction with a tax credit. President Bush hasn’t signed on to the proposal—and most voters hope he doesn’t. In a survey of likely voters, conducted by the National Association of Home Builders in November, 73 percent of respondents said they believed the government should keep the mortgage interest deduction. Even 62 percent of renters said the deduction should be preserved. To learn more about why eliminating it is a bad idea, and what you can do to help preserve it, visit’s Government Affairs page.

By the way, you’ll be happy to know I’m making a special effort to keep demand for housing high: My husband and I brought a new little consumer into the world last year. I figure he’ll be ready to buy his first house in 2030.

Stacey Moncrieff

Stacey is executive editor of publications for the National Association of REALTORS® and editor in chief of REALTOR® Magazine.