8 Real Estate 'Rules' Financial Advisors Say You Should Break in 2025

Traditional real estate rules have permeated the minds of seemingly everyone. A few longstanding rules include the idea that you should always buy a house instead of renting, and holding a home for the long term could be your best investment. While these rules may have worked for smart homeowners during previous economic climates, they don't always stand the test of time.

In this guide, we explore some of the traditional real estate rules experts suggest you might want to break in 2025's market.

When mortgage rates drop, everyone seems in a rush to refinance. While refinancing can make sense sometimes, it's not always the right move.

"With all of the closing costs associated with refinancing I would only recommend it every 8 to 10 years, depending on where interest rates are at," says Scott Krase, a wealth manager at Connor & Gallagher OneSource.

Generally, refinancing only makes sense if you stand to save money. With upfront fees, you'll need to weigh your costs against your future monthly savings. If you plan to move before recouping your upfront costs, refinancing likely won't make sense.

This advice is a common refrain from older generations. Many have watched their home value soar across decades of homeownership. Even though your home value may rise, it's not always the best investment opportunity.

It's important to remember that home ownership comes with extra expenses beyond the purchase price, which many don't factor into their "growth."

"There is always some sort of maintenance on the home along with unexpected expenses like the furnace or AC going out," says Krase. "Does the roof need repairs that's not covered by insurance? Do you have a deck or patio in the back? If so, that's a cost in the near future."

Instead of pouring money into your home, consider growing it through an investment portfolio containing index funds, which may offer a better return and greater flexibility in the long term.

We've all heard the mantra that buying is better than renting. For many, that idea pushes a pursuit of homeownership at almost any cost. But with high borrowing costs and unexpected maintenance expenses, homeownership isn't always the financially sound choice.

"In many metropolitan markets in 2025, renting can be more financially rational than buying," says Chad Cummings, CPA and attorney at Cummings & Cummings Law.

For example, let's say you are considering a $600,000 home purchase in the Miami area, with a monthly mortgage payment of around $5,000. Alternatively, you could find a rental for approximately $3,200. If you opted to rent instead of buy, you could free up over $1,500 per month to save, invest, pay off debt, or even upgrade your lifestyle in other ways.

The idea that home prices always go up sounds comforting, especially if you are a homeowner or prospective homeowner. But, unfortunately, that's not always the case. In some market conditions, home prices can drop.

If you monitor home prices, you'll likely see ups and downs in value along the way. For example, the Florida housing market has seen average home values fall by 4.8% in the last year.

As the economy shifts, home prices in a region can stall or decline. With that, buying a home doesn't guarantee asset growth.

Mortgage interest rates can have a big impact on your home purchase. Lower interest rates can make homeownership more accessible, as they result in lower interest charges. But waiting for lower rates isn't always a good strategy.

Steven Afra, managing partner at Nvestor Funding, a real estate investment financing company, points out that it's okay to break this rule in today's market.

"Property values are currently lower and, in some areas, still declining," says Afra. "That creates an opportunity to buy at a better price."

Gone are the days of needing a 20% down payment to purchase a home. It "can be 3 or 5% depending on your credit rating," says Krase.

Instead of saving up for a 20% down payment, you might be able to jump into homeownership sooner with a smaller down payment. Although this might result in a higher monthly payment, it could open the door to buying a home sooner than you had hoped.

While homeownership often does give you more control over your space, it's not always a lifestyle upgrade for everyone.

Jay Zigmont, PhD, CFP, and founder of Childfree Trust, suggests buying might not be the right move for everyone. "Renting provides flexibility. If you don't know where you will be in 5–7 years, then buying a house is probably not the best choice in this market," says Zigmont.

Zigmont continues, "Remember, your rent payment is the maximum you pay each month. Your mortgage is the minimum you pay each month. There are a lot of hidden costs to homeownership." If you value flexibility, locking in a home purchase might not enhance your life. It might even put a damper on your dreams.

Many homeowners believe that refinancing is available at any time and is a breeze. For some, this encourages them to take on adjustable-rate mortgages, which often start off with lower payments that may rise over time.

"The pitfall emerges when families assume they will refinance before the rate adjusts," says Cummings. "A credit downgrade, regional housing downturn, or even a divorce can block refinancing, leaving the borrower facing an immediate 30 to 40 percent increase in monthly payments."

Don't count on refinancing as a solution for lowering your monthly mortgage payment. Instead, try to keep your mortgage payment manageable at all times.

Buying a home is a dream come true for many Americans. As you weigh out common real estate rules, consider what makes the most sense for your situation. It's often okay to break a "rule" if it makes sense for your home-buying journey and overall financial picture. At the end of the day, it is up to you to decide whether homeownership is a smart move to grow your wealth or not.