I’m visiting my family right now, and every discussion these days seems to be about real estate. I suppose it’s only natural: my cousin and his wife just bought their first home, my aunt sells real estate, my grandfather is heavily invested in real estate and my dad manages real estate.

The question that every family member gets — even the ones who are already proud home owners — is when are you going to buy a house? Occasionally, we get asked about investment properties, but generally the family wants to know if anyone’s found a real steal.

Real Estate Always Has Value

My grandfather immigrated from Europe. He was brought up with the idea that land ownership truly represents wealth and over the years, he’s managed to get most of the family thinking the same thing. To my grandfather, there really is no wrong time to buy real estate. He helped my cousin get a mortgage on his home even as the housing market is dropping because he’s confident that it will rebound.

In the same vein, my grandfather didn’t put his retirement savings in stocks or other investments that run even the slightest risk of being worth only the paper they’re printed on. Instead, he picked a few income-producing properties and worked hard to minimize expenses. I like to think of his strategy as successful conservative: real estate really can be one of the most conservative investments because, in general, real estate prices don’t surge upwards but it’s also one of the least liquid assets you can have. If you go about investing in real estate the right way, though, you really can make a bundle.

The House: Real Estate’s Starting Point

Moving into a house of your own really is real estate investment at its most basic. While I’ve seen plenty of breakdowns arguing that apartment-living is actually cheaper than home ownership, the general idea that you’re building equity rather than paying for the pleasure of a residence does make sense.

But when should you actually plop down the cash for a house? When is the right time to commit yourself to a mortgage? Is it, as my family seems to think, right this very instant?

While I don’t think that buying in a down market is a bad idea, I really don’t agree with the philosophy that any time is a good time to buy real estate. I say that not because I think it’s a good idea to buy when prices are sky high, but because I think that just buying can lead to picking mortgages you can’t afford or raiding your 401(k) for a down payment.

If you have good credit and a good down payment, though, I don’t think you should refuse to buy a house right now. I’m not saying that you have to buy a house, but I’m also not telling you that you absolutely shouldn’t buy a house until the market stabilizes. It has to come down to whether you can get a mortgage you’re comfortable in times that are uncomfortable, economically speaking.

Bankrate recently ran an article titled, “A dozen ways to get a down payment.” The article was pretty in-depth, but I’d like to take a look at how realistic their twelve suggestions really are.

1. Set up an automatic saving plan. — An automatic savings plan is a great suggestion. Almost every bank makes it easy to set up an automatic withdrawal from your checking to your savings. It’s just a matter of doing it.
2. Get a gift from your parents, grandparents, other relatives or friends. — Personally, I don’t think that gifts are the best way to come up with a down payment. There’s a lot of potential for family problems down the road. That said, some families are more than happy to help out.
3. Sell a car, boat, motorcycle, collectibles or other assets. — I’d like to see a show of hands: how many first-time home buyers have a boat lying around that they can sell? Sure, if you have assets you can sell, go for it. Not very many people have that option, though.
4. Liquidate stocks, mutual funds, savings bonds or other investments. — This is another ‘you can do it, but I don’t recommend it’ idea. A lot of investments will provide you far more income in the future than a house will. If there’s no pressing reason to move into a house, it’s much better to wait and save.
5. Allocate your income tax refund. — Your savings account is a great place for your income tax refund. And yes, I do think it’s more than reasonable to use it for your down payment. But be careful about relying on your income tax refund — it’s not always as big as you expect.
6. Take a loan from your 401(k) retirement plan and repay yourself with interest. — This is the worst idea ever, second only to the next one on this list.
7. Withdraw funds from your 401(k) plan, subject to taxes and penalties. — Withdrawing money from your 401(k) is essentially robbing your future self: that investment balloons due to compound interest. The later money is added, the less money you get. Furthermore, there are significant monetary penalties for withdrawing money from your 401(k) plan.
8. Collect on a loan that you made to someone else. — It’s nice to be able to collect on a loan, but very few people have outstanding loans significant enough to help them make a down payment. Furthermore, if the loan is to a friend or family member, it’s entirely possible the lender will never see a cent of repayment.
9. Get a bonus from your employer. — I’d suggest expanding on this idea: make more money in general. Open a side business, take on more hours, etc. A bonus is kind of like winning the lottery, though. I wouldn’t suggest counting on it.
10. Explore homebuyer programs for public servants, if you qualify. — There are programs meant to help public servants buy homes. There are also other programs, often through trade associations that provide some level of support for non-public servants as well.
11. Apply for a state or local government homebuyer down payment program. — You should take advantage of any home buyer program you qualify for. There may be a little added paperwork, but the financial help is more than worth it.
12. Use a private down-payment assistance program. — My only objection to private assistance is that there are a few scammers out there who will take advantage of you. If you need the assistance and just can’t wait and save, be very careful and do your homework on whoever you decide to work with.

Last week, two of my friends closed on their first home. It’s a beautiful house, great neighborhood, big yard. It’s everything they could ask for, but that perfect home is coming at quite a price.

My friends decided that now was the ideal time to buy, because home prices have dropped significantly in our area. Their logic is easy to follow: no one really knows just how low the market is going to go, so why take the risk that prices might begin to rise before they lock in that low home price? Sure, they might miss out on a significantly lower price, but then again they might not.

But, despite the low price they’ve found, my friends aren’t in a good position to buy. They didn’t save up a down payment before buying, which is usually a red flag. The mortgage crisis has guaranteed that they couldn’t get a zero-down mortgage, but they’ve managed to find the next best thing. 401(k) programs (along with some other retirement savings programs) allow you to borrow money from your account for little things like major medical expenses and purchasing a home. There are a few catches, though:

• you have to repay that money, and fast! You may have only five years to get that money back in your account or face major tax penalties.
• you lose out on any interest your retirement savings was earning.
• you often have to pay taxes or penalties on your withdrawal.

Many homeowners used their 401(k) savings to help them make a down payment, but as a general rule, it’s not a good idea. Doing so puts a person on pretty shaky financial ground: not only would you need to make your mortgage payments but you’d be making another large payment to get that money back into your retirement account. Essentially you could be putting both your new home and your retirement at risk.

Even if you’re sure that you can handle double payments, you’ll probably be better off saving up money for a down payment. Yes, you won’t get into your dream house right now, but you’ll increase your ability to keep that perfect house. And with a little effort, you may be able to surprise yourself with how fast you can save up for a down payment. You’ll have less debt overall, as well: while money withdrawn from your 401(k) is yours, the need to repay it or face penalties can turn your retirement savings from an asset into straight out debt.

My friends decided to take the risk, and that’s their — and your — choice. But piling that risk on top of a problematic real estate market seems to be asking for trouble.