Headlines are mentioning that home prices are beginning to decline in certain markets. If you’re starting to have doubts about your plans because of what you’re seeing in the news, here’s what you should consider.

It's accurate that some metropolitan areas are experiencing small price declines. However, don't lose sight of this important fact: home values tend to appreciate over time, as shown in the graph below.

While the 2008 housing crash is fresh in many minds, it's important to remember that it was an anomaly rather than a trend. Before and after that incident, we haven't seen anything quite like it. The market conditions back then were significantly different—think relaxed lending practices, low homeowner equity, and an excess number of available homes. Today’s housing market is not in the same position. So, when you read headlines about prices slowing down, normalizing, or even dipping, there's no need to panic about another major crash on the horizon.

Short-term dips often aren't a big deal in the grand scheme of things. Here's why they usually don't set back long-term goals.

What’s the Five-Year Rule?

In real estate, there's something called the five-year rule. Essentially, if you’re planning to stay in your home for at least five years, those short-term price drops usually won’t have a big impact on you. Home values generally rise over the long haul. So even if prices dip for a year or two, they typically recover and often exceed previous levels over time.

““. . . 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.”
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— Lance Lambert, Co-Founder of ResiClub

What’s Happening in Today’s Market?

Most housing markets are still seeing home prices go up, but not as quickly as they did a few years ago. This should help put your mind at ease.

In the bigger cities where prices are starting to level off (shown by the red bars in the graph below), the average decrease is just around -2.9% since April 2024. This isn't a big decline like what we faced in 2008.

Take a look at the graph below, and you’ll notice that prices in most of those markets have risen significantly compared to five years ago (represented by the blue bars). This means that homeowners who have been in their houses for a few years are still ahead in terms of value.

The Big Picture

In the last five years, home prices have jumped by an impressive 55%, based on data from the Federal Housing Finance Agency (FHFA). So, if you see a slight dip in the short term, it’s not a big deal. Even if your area has experienced a 2% decline, you're still ahead overall.

When you take a closer look at those 5-year gains using FHFA data, you'll notice that home values have actually increased in every state over

It's important not to overthink what's going on this month or even this year. If you're in this for the long run—like most homeowners are—your property's value will probably increase over time.

Bottom Line

Absolutely, prices can fluctuate in the short term. However, history indicates that home values tend to appreciate over time, especially if you stay in your home for at least five years. So, whether you're considering buying or selling, keep that five-year rule in mind and focus on the bigger picture.

When you imagine your life five years from now, where does owning a home fit into that vision?

Let’s chat and see how we can get you there.