July Home Prices Hit a Record High. Here's How to Buy When Prices Are Up

Today's housing market is an unquestionably challenging one for home buyers. Not only is it very expensive to sign a mortgage, but home prices seem to keep going nowhere but up.

In July, home prices rose 1% on an annual basis, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Index. That marks the sixth consecutive month of home price gains and represents a record high.

If you've been trying to buy a home, you may be frustrated with record-high prices and mortgage rates. And just as mortgage lenders don't seem to be on the cusp of cutting borrowing rates, home prices don't seem to be on the verge of falling.

What should you do if you really don't want to keep postponing your home purchase? Believe it or not, you have some options. Here are a few you can explore.

1. Don’t go for the most desirable zip code

You may have your heart set on a neighborhood that's in high demand. But you're also more likely to pay a premium for a home that's located in a neighborhood where many buyers really want to live.

A better bet? Research neighborhoods that are under development and work with your real estate agent to identify one that has good potential based on things like amenities and construction projects in progress. You might pay a lot less for a home in a neighborhood like this. And then, there's a chance that once it's completely developed, the value of your home will climb, giving you more options.

2. Buy a home jointly with someone else

It's a big myth that if you want to buy a home with someone else, that other person has to be your spouse. If you don't have a spouse, you can team up with a family member or friend and buy a home together. Pooling your financial resources might give you more options and allow you to build equity in a home together.

That said, you'll need to be careful when entering into one of these arrangements. That means setting clear ground rules in writing so there's no confusion as to who's financially responsible for what costs and who's on the hook for things like maintenance and upkeep.

You'll also need to draw up guidelines that dictate what will happen if one of you wants to sell the home before the other does. It's not a bad idea to get a lawyer to help draft this type of agreement when you're talking about an asset as substantial as a home.

3. Buy a home you can rent out as well as live in yourself

Perhaps you have enough savings to cover a down payment on a home at today's prices, but keeping up with your mortgage payments and peripheral expenses will be a stretch. In that case, you can look to a home that has rental potential. A property with a separate finished basement, for example, could fit this bill.

The downside here is that you'll be living with a tenant, meaning you'll have to play the role of landlord. The upside is that you'll have someone subsidizing your mortgage while you gain equity in your home.

Keep in mind that you're more likely to find a tenant for this sort of arrangement if you buy a home in a city center near jobs or in a college town where housing is pretty much always needed. This strategy may not work as well if you buy a home in a random suburb that largely caters to families. It's one thing for a budget-conscious college student to move into somebody's basement, but getting a family of four to do the same may be a harder sell.

Today's real estate market is definitely challenging. But that doesn't mean your only strategy is sitting back and waiting for home prices to come down. If you're willing to make some adjustment to your plans, you may find that homeownership is attainable now after all.