The 5-Year Rule Is No More: Here’s How Long You’ll Need To Stay in Your House To Truly Break Even

For generations, the math of owning a home was simple: Buy a place and stay put for about five years, and rising home values would cover what you spent to get in the door. That “five-year rule” became a guideline for buyers wondering how long they needed to hold on before they could sell without losing money.

But today's housing market is rewriting that rule. Stubborn mortgage rates, high transaction costs, and cooling or even falling home prices are stretching out how long it takes recent buyers to break even.

“It is important for buyers to set their expectations given the market environment they are buying into,” says Hannah Jones, senior economic research analyst at Realtor.com®.

Common advice still says you should plan to stay at least five years to break even. However, if you buy in 2026, our analysis shows you might not fully recoup your costs until 2036.

Common advice still says you should plan to stay at least five years to break even. However, if you buy in 2026, our analysis shows you might not fully recoup your costs until 2036.

The 5-year rule, explained

Purchasing real estate is expensive. Buyers have to come up with the cash for a down payment, agent fees, and closing costs—just to name a few.  But they can typically earn that money back in a short time frame through home value appreciation.

That’s where the five-year rule comes into play. Widely cited as the gold standard of homebuying ROI, real estate adviser Sarah Strohschein, of Engel and Völkers, says it's really more of a guideline.

“It always depends on the market. In areas with steady appreciation, homeowners might see returns sooner. In slower markets, holding longer may be necessary to avoid losses.”

How you care for and update your property can also have an impact, she adds. Making value-boosting improvements may also shorten the timeline.

Equity headwinds for 2026 buyers

“In today's market, buyers should consider whether they are prepared to stay put for a bit longer than was previously required to break even,” says Jones. Here's why:

1. Slowing appreciation

In 2025, home appreciation slowed to 2%, down from 4.5% in 2024 and an average of 6.5% in the prior decade, according to the 2026 Market Forecast from Realtor.com. Growth is expected to tick up in the year ahead, but only modestly—rising to 2.2%.

For homeowners, that’s still positive (values are rising), but the pace is nowhere near the breakneck gains of 2021, when prices jumped 17.9% on average, according to Realtor.com data.

Blockbuster years have a way of setting a mental precedent, but a return to that kind of appreciation is highly unlikely. Instead, many homeowners will need to hold on to their properties longer to build the same amount of equity they might have accumulated more quickly a few years ago.

Keep in mind, though, these are national averages.

They're a useful but imperfect metric, as they can blur what's actually happening on the ground. There's significant regional variation in appreciation pacing: In 2025, for example, home prices were up 10.4% in the Northeast, 5.8% in the Midwest, 3.6% in the West, and 1.9% in the South from 2024.

2. High transaction costs

Transaction costs will vary from home sale to home sale, but buyers can anticipate spending between 2% and 5% of the home's purchase price on closing costs such as agent fees and taxes.

Since these expenses are proportionate, high home prices push these costs up and make it even harder for homebuyers to make up the difference in their overhead costs.

3. Slipping home prices

The biggest risk 2026 buyers face, though, is negative equity. In this scenario, buyers might owe more than their home is worth if they buy a house at peak market value right before prices fall.

Some popular markets have already started to wobble. San Francisco, Miami, and Austin, TX, all rang in 2025 with notable year-over-year drops in median list price, falling 10.87%, 9.9%, and 7.86%, respectively. Since then, San Francisco has largely stabilized, with median listing prices now roughly flat year over year. Austin and Miami, however, are still in the red, with prices down 8.2% and 3.8% compared to the year before.

Other cities are expected to follow their lead in 2026. Cape Coral, FL, is projected to see prices fall more than 10% in 2026, while Denver and Sarasota, FL, are expected to see declines of 3.4% and 8.9%, respectively. For buyers in these markets, the timing of a purchase and how long they plan to stay put will matter more than ever.

4. Rising expenses

Property taxes, utilities, and homeowners insurance have all surged in recent years, adding another layer of carrying costs that can eat into a homeowner’s eventual profit.

In 2025 alone, homeowners paid nearly 10% more for electricity than the year before, according to federal data—far outpacing both wage growth and overall inflation.

If the break-even math boils down to subtracting your costs from your gains, every monthly bill belongs on the “cost” side of the ledger. As such, these higher running costs don’t just strain your budget now, they also drag on your final payoff when it’s time to sell.

How long 2026 homebuyers will need to stay in their home

Given these challenges, the estimated break-even timeline for buyers in the year ahead may be as long as 10 years. Let’s take a look at the numbers:

We can estimate, based on 2025 data, that a home purchased will have a median sale price close to $400,000, a mortgage rate between 6.3% and 6.7%, a tax of 1.7%, and 4% transaction costs. 

We’ll assume that this house appreciates at roughly 4% through the years—but it’s worth noting that this is a big assumption. 

Appreciation rates can vary significantly from year to year based on market factors. Look no further than the past five years for proof: Home prices climbed an average of 9.4% in 2020, 17.9% in 2021, 10.5% in 2022, 1.1% in 2023, and 4.5% in 2024, averaging 8.68% during this period.

Still, assuming a home with a conservative annual appreciation rate of just under 4% and a down payment of 10%, it would take a homeowner 10 years or more to recoup their costs. Even if they double their down payment to 20%, it would take them eight years to reach their break-even point.

What if you need to sell before then?

If you need to sell your house in two years, or even six months, you can. You just might not make back the money you spent to purchase the home.

For many homebuyers, this might not matter at all. 

“Buying a home is about both finances and lifestyle. Beyond appreciation, it offers stability, equity growth, and tax benefits,” says Strohschein. 

Even though the break-even timeline is longer than it has been in recent years, it’s still a good investment.

“The key is making a smart, informed purchase with guidance from a trusted local real estate adviser,” she adds.

After all, the five-year rule—and even our updated 10-year rule—is really more of a guideline.