BEND, Ore. (CNN/Money) –With home prices as high as they are and interest rates creeping up, you might be seconding-guessing your decision to buy a house now.

How, you ask, can you be sure you're not buying at the top?

The answer: You can't.

"It's so hard to time the real estate market," said David Stiff, a senior economist for Fiserv CSW who makes his living analyzing local housing markets. In fact, when he started shopping for his own house two years ago, Stiff agonized over whether his timing was right. "You should see all the spreadsheets," he said.

Eventually, though, it wasn't the spreadsheets that held the answer.

It was the simple fact that he needed a place to live, the mortgage was within his means and he planned to stick around for a while.

"If your goal is to find a place to live, don't worry about timing," Stiff said, explaining that while home prices do fluctuate, over the long run they increase at about the same rate as average incomes.

True, the virtues of long-term investing meant little when your dotcom stocks were delisted. Yet, the housing market is different from the stock market for several reasons.

• Intrinsic Value After the stock market skidded, your Pets.com and Furniture.com stocks were good for nothing, save a capital gains loss. But assuming you can afford the monthly payment, your house will always be worth something to you, even if it's just a place to call home.
• Limited Supply While there can be a seemingly endless supply of new stock offerings, new housing requires land, permits, materials, labor and time. The supply of housing nationwide is still near all-time lows, according to data from the National Association of Realtors (NAR).
• Less Liquidity What's more, said Federal Deposit Insurance Corporation economist Cynthia Angell in a recent report, housing is less vulnerable to price bubbles because, unlike stock, you can't buy or sell a home on a moment's notice. "Were prices to fall in certain markets, history and academic research suggest that potential sellers would tend to withdraw from the marketplace rather than proceed with panic sales," said Angell.

That's not to say individual markets haven't suffered.

Between 1991 and 1996, home prices in the Los Angeles area sunk 21 percent, according to the NAR. In New York, home values fell 10 percent between 1988 and 1995. In Boston, prices came down 7 percent between 1989 and 1991.

But, these were incremental declines, said NAR economist Lawrence Yun, due primarily to oversupply of homes coupled with prolonged job losses. "Right now it's hard to find an area with an oversupply of houses, and the economy is showing signs of recovery," Yun added.

Fiserv CSW is forecasting that prices in all of the metro markets it tracks will continue to rise, though it expects the rate of appreciation to slow in most areas. (Click here for Fiserv CSW's latest housing forecast.)

Still worried? While it's difficult to time the real estate market, there are ways to get a feel for housing prospects in your area.

First consider how quickly houses are selling now compared with years past. When a real estate market cools, say economists, prices don't necessarily come down – at least not right away. Houses simply take longer to sell.

"If you drive down a street and see that every other house is for sale that is a direct reflection of supply and demand," said Anthony Hsieh, CEO of HomeLoanCenter.com.

You should be able to find out what the average time on the market is in your area from a real estate agent or the local multiple listing service. Nationally, the average time on the market has been about four to five weeks, according to NAR spokesperson Walter Molony, versus about eight weeks for most of the 1990s.

Employment is another key factor. Over time, home values tend to increase at the same rate as income. Although home prices in most parts of the country have outpaced income growth for the past five years, said Stiff, that may be because home prices lagged through much of the 1990s.

While you may not be able to get the latest employment statistics for your town, you should consider whether key employers are moving in or moving out. It's no coincidence that the cities with relatively weak housing markets, such as Salt Lake City and Austin, have experienced job losses.

Rental prices are also telling. The same forces that drive home prices -- such as demographic trends or a shortage in land -- should also drive up rents. (See "For rent, cheap")

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By this measure, home prices in Washington D.C. and Southern California, where rents increased 2.5 percent and 3.5 percent respectively last year, may be going up for the simple fact that there are more people than housing. Home prices in San Francisco, where rents fell 6 percent last year, may be more precarious.

What about interest rates? According to the Mortgage Bankers Association's latest forecast, the 30-year fixed mortgage will gradually climb to 6.5 percent by the end of 2005. Because higher rates make housing less affordable, prices could be affected. (See "Bracing for higher rates").

On the other hand, the same force behind rising rates -- an improving economy -- is expected to boost employment, and that could be good news for housing.

In any case, experts caution against buying for the simple point of making a quick buck or buying out of panic that you'll be priced out of the market.

"If you buy a house thinking you're going to make money in a year and the market did correct you're stuck with that property," said Hsieh. "It's great if you can make money, but at the end of the day a home is where you live."

Though home prices could very well continue their run, you should buy with the assumption that it will take at least two or three years to recoup the transaction costs of buying and selling. In "hot" real estate markets, which are more vulnerable to price drops, you may want to plan to stay in the house even longer.

What if you think the local market is cooling?

Assuming you plan to stick around for a while, a break in housing's unprecedented run may be a good opportunity to find the right place, at the right price.