The sentence you provided is mostly correct, but it can be made a little clearer and more natural. Here's the sentence with a small change:
Original sentence: Woodpecker nests are valuable real estate that is used by other birds over many years.
Suggested sentence: Woodpecker nests are valuable homes that other birds use for many years.
Explanation:
- Using 'homes' instead of 'real estate' is easier for a 5-year-old to understand.
- Changing 'that is used' to 'that other birds use' makes it simpler and clearer.
- 'Over many years' is similar to 'for many years' and sounds more natural here.