Continue to rent, or buy now?---ZT

Dear Steve,
I found what potentially could be the perfect home for my family in a great area and school district, and at a great price compared to similar homes in the same area. But I am holding back because of the economy and the real estate situation. Should I put my fears aside and take the plunge, or should I keep renting and wait for better times to invest in a home?
-- Ramon

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Dear Ramon,
I have the answer, but I think you already beat me to the punch with your question. You listed many valid reasons to buy a house and paramount among them was a gut instinct that you found the perfect home for your family. What could be more important?

Of course, there are moving parts in any home-buying equation. Let\'s put that family sentiment aside for a minute and look at the numbers. For the sake of example, we\'ll say the home you\'re considering is priced at $200,000 but that you opt to gauge the market for another year, speculating values will drop another 5 percent -- which they do.

Now in that one-year period, you\'ll have continued to rent a suitably family-sized apartment or house for, say, $1,000 a month (probably a conservative figure). And if you were lucky enough to find another home of the same quality and price range that you first fancied after that year expires, then you\'d have saved $10,000 on your purchase. OK, fine. However, Ramon, you\'ll have spent $12,000 in that year in rent with nothing but canceled checks to show for it.

Even with the adjustment in agent sales commission on the slightly cheaper home, assuming you use an agent, you still lose in the rent scenario. Plus, there\'s no telling if interest rates will be as low in a year. You may run the risk of paying more in the long term by waiting. Even if your market dropped 6 percent or 7 percent in that year, cost comparisons are still close enough to push you into homeownership.

In other words, why risk losing that dream home that caught your fancy? As I\'ve noted before, a home is a shelter first, an investment second. An irrational departure from that basic fundamental helped get us into this whole housing mess in the first place. Contrary to some sentiments, there is still reasonable home-financing to be found out there for reasonable credit risks. Lenders may not be lining up at your door or in your e-mail inbox like before, but there is money to lend.

Certainly, some of your decision-making will be based on whether you and (or) your spouse have reasonably recession-proof work. Obviously, you\'d hate to have to relocate suddenly and sell a house you just bought. You\'d never recoup your closing costs, inspection fees and other upfront home-buying costs in that scenario.

But if you feel secure about your income stream and savor that home and neighborhood as an ideal family haven, why not jump into the ownership game while so many other players are on the sidelines twiddling their thumbs or nursing their wounds?