The five-year rule for home prices is a helpful guideline for anyone thinking about buying or selling. It’s based on the idea that staying in a home for at least five years can help offset costs, build equity, and protect you from short-term market shifts. Let’s break down why this rule matters.
Let’s break it down.
What Is the Five-Year Rule?
The Five-Year Rule suggests that you should plan to stay in a home for at least five years before selling it. The idea is simple: it usually takes that long to build enough equity to offset the costs of buying and selling.
When you buy a home, you pay upfront costs like closing fees, moving expenses, and possibly renovations. When you sell, there are agent commissions, more fees, and sometimes even taxes. If you move too soon, you might not recoup those costs—especially if the market hasn’t appreciated much.
Why Five Years?
Five years is generally seen as the sweet spot because:
- Home values tend to increase over time. In most markets, real estate appreciates gradually. Staying put gives your home more time to gain value.
- You pay down your mortgage. The longer you stay, the more equity you build.
- You spread out your upfront costs. The money you spent buying the home makes more sense over a longer timeframe.
In short, five years gives you a better chance at walking away with a profit—or at least breaking even.
When the Rule Might Not Apply
Of course, life doesn’t always follow a timeline. If you need to move for work, family, or personal reasons, you might have to sell sooner. And in hot markets, home values can spike fast—sometimes making it worth selling in just a few years.
On the flip side, if the market cools or dips, even five years might not be enough to turn a profit. That’s why it’s always important to check in with a local real estate expert before making any major decisions.
Should You Wait to Sell?
Not necessarily. If your home has gone up in value significantly, or your needs have changed, it might make sense to sell before hitting that five-year mark.
A quick conversation with a real estate professional can help you understand your home’s current value, how much equity you’ve built, and what your options look like moving forward.
The Five-Year Rule is a helpful guideline—not a hard rule. Real estate is personal. Your lifestyle, financial goals, and the current market all play a role.
If you’re thinking about moving, let’s talk. Whether it’s been two years or ten, I can help you figure out if the timing makes sense.
Source: Keeping Current Matters
