Recent headlines about home prices dipping in some markets might have you questioning your next move in real estate. It’s true—certain cities are seeing small declines. But don’t let the media buzz throw you off. The Five-Year Rule offers a clear, long-term perspective that cuts through the noise, helping you make confident decisions whether you’re buying or selling. Here’s how this simple rule works, what it reveals about today’s market, and why it’s your guide in 2025.

Understanding the Five-Year Rule

The housing market moves in cycles, swayed by economic changes, interest rates, and buyer demand. A single month’s price drop or spike can feel like a big deal, but it’s often just a temporary blip. The Five-Year Rule encourages you to look at home price trends over at least five years to see the true picture. Why five years? It’s long enough to smooth out short-term ups and downs but short enough to stay relevant. History shows that home values almost always rise over time, so if you plan to own your home for five years or more, small dips usually don’t hurt.

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

“…the ‘five-year rule of thumb’ in real estate…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.”

The 2008 housing crash is a lingering fear for many, but it was an exception, not the rule. Back then, loose lending standards, low homeowner equity, and a massive oversupply of homes created a unique crisis—conditions we don’t see today. So, let’s not let cooling price headlines spark fears of another collapse.

Today’s Market: Dips Don’t Tell the Whole Story

In 2025, most U.S. housing markets are still seeing home prices grow, just at a slower pace than the wild pandemic years. In a few major cities, prices have dipped slightly—by about 2.9% on average since April 2024. That’s a far cry from the steep drops of 2008. More importantly, homeowners in these markets who bought five years ago are sitting on significant gains, with prices up around 50% or more since 2020.

The image below puts these short-term dips in perspective, comparing recent price changes to five-year gains in markets where prices are cooling.

This image shows price declines of about 2.9% since April 2024 in select metros, dwarfed by 48–55% gains since 2020, proving long-term growth outweighs short-term dips.

Nationally, home prices have surged 55% over the past five years, according to the Federal Housing Finance Agency (FHFA). That means a home worth $200,000 in 2020 could be worth $310,000 today. A 2.9% dip barely dents that kind of growth. Even better, every single state has seen price increases since 2020—no exceptions.

The image below maps out five-year price growth across the U.S., showing the consistent upward trend.

This image highlights home price gains from 2020 to 2025, ranging from 44.3% in Alaska to 67.6% in Florida, based on FHFA data.

How the Five-Year Rule Guides Your Next Move

For Buyers

If you’re considering buying, don’t let small price dips scare you off. In markets with cooling prices, you have leverage to negotiate better deals or ask for seller concessions, like help with closing costs. The Five-Year Rule shows that buying now sets you up for gains over the next five years, as prices historically rebound and grow. With 55% national growth since 2020, homeownership remains a strong long-term investment.

For Sellers

If you’re selling in a cooling market, price your home realistically to stand out. The Five-Year Rule reminds you that your home’s value is likely up significantly since 2020, so a small dip doesn’t erase your gains. In hotter markets, you can still capitalize on strong demand. Either way, your investment is probably in great shape over the long haul.

Why Today’s Market Isn’t Like 2008

Today’s market has stronger fundamentals than 2008. Stricter lending rules, higher homeowner equity, and no widespread oversupply (except in a few areas) keep things stable. The Five-Year Rule puts these differences in focus, showing that today’s dips are normal market adjustments, not a sign of trouble.

The Bottom Line

Short-term price dips are just part of the housing market’s rhythm. The Five-Year Rule proves that home values grow over time—up 55% nationally since 2020. Whether you’re buying or selling, plan for at least five years, and you’re likely to come out ahead. Don’t let headlines shake you—trust the long-term trend and make your move with confidence.

Data from FHFA (2020–2025).

Eugene Prospero | S.179605

Virtue Real Estate | Darin Marques Group