If you’ve been following real estate headlines lately, you might be worried about home prices slipping. But history shows those concerns are often short-lived—especially if you're planning to stay put for a while.
What Is the 5-Year Rule?
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.”
In simple terms, if you plan to stay in your home for at least five years, you’re more likely to ride out the ups and downs and benefit from overall appreciation.
Home Prices Usually Rise Over Time
One of the biggest misconceptions about real estate is that prices are unpredictable. While there are short-term fluctuations, home prices have historically trended upward.
The chart below—based on data from the Federal Housing Finance Agency (FHFA)—shows how home prices have changed year-over-year since the early 1990s:
Aside from the Great Recession, home prices have increased steadily. The average year-over-year gain sits at around 4.55%. This reinforces the idea that real estate is a long-term investment.
Long-Term Gains Offset Short-Term Dips
Yes, some markets are currently seeing mild declines—but those short-term dips are far outweighed by gains over the past few years.
Take a look at this chart comparing home value changes since 2020 versus year-over-year:
Even in cities like Austin and Tampa, where prices have dipped slightly over the past year, total growth since 2020 remains strong—often above 30%. Other markets, like Miami, Orlando, and Phoenix, are still up by more than 45%.
Why This Matters for Buyers
If you’re buying a home, it's important to look beyond the latest market headlines. The five-year rule is a reminder that homeownership is a long-term play.
If you plan to stay put for five years or more, chances are you’ll come out ahead—with more equity, more value, and less stress about short-term price movements.
Whether you're moving into something new, or thinking about selling, the right guidance can make all the difference. Let’s talk about your goals, your timeline, and how to make the most of your next move.
The information and opinions in this article are not investment advice. Tim Stice makes no guarantees about accuracy or completeness. Always do your own research and consult a professional before making financial decisions. Tim Stice is not liable for any loss or damage resulting from reliance on this content.
