Why the 5-Year Rule Still Makes Sense in Today's Market

According to Keeping Current Matters, recent headlines have highlighted a slight dip in home prices — about 2.9% nationwide since April 2024. For some, this has raised concerns about whether now is the right time to buy or sell. But from our perspective as a team of experienced real estate professionals, the short-term view doesn't tell the full story.

To truly understand the real estate market, you have to take a step back. That's where the Five-Year Rule comes in — a practical and powerful way to evaluate your real estate decisions with long-term success in mind.

What Is the Five-Year Rule?

The Five-Year Rule is a simple yet strategic approach: if you plan to stay in your home (or hold your investment) for at least five years, short-term price fluctuations are far less important. Real estate isn't about quick wins — it's about steady growth, equity building, and making smart moves that serve your future.

What the Data Tells Us

The long-term trends are incredibly encouraging. According to data from the Federal Housing Finance Agency (FHFA), home values in the U.S. have risen by over 55% in the past five years. That means even if the market cools temporarily, long-term homeowners are likely to see significant gains over time.

From what we're seeing across the markets we serve, those who bought a home five years ago are in a strong equity position today — regardless of minor recent declines. That's the power of time in the market.

Why We Recommend This Mindset

Working with so many buyers, sellers, and investors over the years, we've learned that success in real estate comes from thinking long-term. Here's why the Five-Year Rule makes a difference:

1. You Build Real Wealth

The longer you own a home, the more you gain from appreciation and mortgage payoff. Over five years, this can result in tens or even hundreds of thousands of dollars in equity — money you can use to upgrade, invest, or secure your financial future.

2. You Stay Grounded During Market Fluctuations

Markets go through natural cycles. When you're focused on your five-year plan, you're less likely to panic during dips and more likely to stay the course and benefit from the eventual rebound.

3. You Make Smarter, More Confident Decisions

When you're not chasing short-term price changes, you're able to buy or sell with purpose. Whether you're purchasing your first home or cashing in on long-held equity, the Five-Year Rule gives you clarity.

Who Should Apply the Five-Year Rule?

Buyers

If you're planning to stay in your next home for five years or more, you're setting yourself up for success. Not only will you have a place to settle and grow — but you'll also have time to build equity and offset any short-term price shifts.

Sellers

If you've owned your home for at least five years, chances are you've built solid equity — even in today's shifting market. That puts you in a strong position to sell strategically and move forward confidently.

Investors

Whether you're holding a single rental or a growing portfolio, long-term ownership reduces volatility and boosts returns. With steady rent income and price appreciation over five years, your investment becomes stronger and more predictable.

What This Means for You

No one can time the market perfectly. But if you take a step back and look at how real estate performs over time, the message is clear: real estate continues to be one of the most dependable wealth-building tools available.

In our experience, clients who focus on the next five years — not just the next few months — make smarter, more rewarding moves. The Five-Year Rule isn't about waiting — it's about planning with purpose.

Whether you're thinking about buying, selling, or investing, we're here to help you navigate the journey with a smart, long-term strategy. Call us today — we'll walk you through the numbers, explore your options, and build a plan that aligns with your life — not just the latest headlines.

Source: keepingcurrentmatters.com