If you don't buy a new home very often, you may not have thought through some aspects of the process. For starters, there's timing. Here are some considerations for would-be homeowners.
If you're not yet a homeowner, but plan to be one in the near future, pay attention to the prices of homes and their trends. One danger in an environment of rapidly rising home prices is that first-time homeowners can find themselves less and less able to buy the home they want. If you currently own a home, the rising market will likely take your present home's value up with it, so that your current home and your next home will be appreciating at similar rates. This is very handy, since the down payment you'll put on that new home can come from equity amassed in the last home.
But if you plan to buy your first home with your non-real estate savings and investments, such as your shares of Wal-Mart
There are alternatives for you, though. You can usually buy your home by putting down a lot less than 20%. There are also programs available that help first-time homebuyers and homebuyers of limited means. Ask around in your area about these.
Another scenario is if you're moving from one region to another, and the two real estate markets are behaving differently -- perhaps one is rising and the other falling. Try to maximize your situation by selling while prices are as high as possible and buying when prices are relatively low. This might entail selling, moving your belongings into storage, and waiting a year for home prices to cool off in your new location. (Though, there's always a chance they'll keep rising.) Or it might mean taking out a home equity loan with which to buy that second home while it's cheaper, and then selling your current home a little later, if prices are still rising briskly.
Of course, success with this kind of market timing is far from a sure thing. Conservative Fools might do well to simply buy what they want when they can afford it. After all, if you aim to stay in your new home for a long time, it probably won't make a huge difference if you bought it for $160,000 or $175,000.
Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article.