Why the Five-Year Rule Still Wins in Real Estate

Lately, you may have seen headlines claiming home prices are dipping in some areas. If that’s made you second guess your real estate plans, here’s a broader perspective that might bring clarity.

Yes, a handful of markets have seen small price adjustments but here’s the key: home values historically rise over time. It’s easy to get caught up in the moment, but stepping back to view the big picture can make all the difference.

Take a look at any long-term chart of home prices, and you’ll see a steady upward trend. While the 2008 crash was a notable exception, it was fueled by very specific, and very different, factors: loose lending practices, too much inventory, and low homeowner equity. Today’s market is built on a far more stable foundation.

What’s the Five-Year Rule?

In real estate, there’s something known as the five-year rule. If you plan to stay in your home for at least five years, you’re typically shielded from short-term market dips. Even if prices decline briefly, they tend to rebound and rise over time.

As Lance Lambert, Co-Founder of ResiClub, explains:

“. . . there’s the ‘five-year rule of thumb’ in real estate—which suggests that most buyers can buffer themselves from mild short-term declines if they plan to own a property for at least that amount of time.”

This mindset helps homeowners avoid making fear-based decisions during temporary market shifts.

What’s Really Happening Right Now?

Most markets are still seeing price growth—just at a more moderate pace than the past few years. In cities where prices are softening slightly, the average drop since April 2024 is only about 2.9%. That’s a far cry from the deep declines of 2008.

And even in those cooling markets, home values are still up significantly compared to five years ago. So, if you’ve owned your home for any length of time, chances are you’ve already gained a lot of equity.

According to the Federal Housing Finance Agency (FHFA), home prices have risen 55% nationwide over the past five years. That’s massive growth and a short-term dip doesn’t undo those long-term gains.

Even better? Every single U.S. state has seen price growth over that same period.

The Takeaway

If you’re thinking about buying or selling, don’t get caught up in short-term market noise. Real estate has always been a long game and the five-year rule is one reason why it works.

Ask yourself: Where do I want to be five years from now? If homeownership is part of that vision, don’t wait for the perfect month... start the process now!

Call me, Teresa Hill, today for expert guidance and personalized real estate support. Whether you're buying, selling, or investing, I’m here to help you make smart moves with confidence.

*Information sourced from FHFA, Realtor.com, & Keeping Current Matters