by Francis Jock

Created on: November 12, 2008   Last Updated: December 20, 2008

Deciding whether to buy or rent a home these days can be a difficult decision. Should you jump in and buy a home knowing that home values are falling across the country, or should you just rent an apartment or house until better times arrive? The mortgage meltdown debacle, tightening credit rules, and the government's intervention into the mortgage lending market have complicated matters beyond what most home buyers care to understand. In the past, buying a home wasn't difficult and almost anyone that wanted to own their own piece of the American pie was able to do so. Today, however the situation is quite different and the government appears ready to abandon home buyers in favor of institutional credit lenders.

Anyone that has paid any attention to the angst in the financial markets has a fair understanding of the reasons for the troubles we are facing. There is plenty of advice and explanation being passed around, although very little of it is of any value to the family preparing to invest their life savings into what could turn out to be a significant financial loss, or gain depending upon location and other economic factors. From an economic perspective, most, if not all, sectors of the economy are now being affected by the economic downturn and the unforeseen, or ignored, threat of losing thousands of jobs in manufacturing sectors has many consumers hedging their investments and curtailing spending until some sense of rationality returns to the marketplace. In the meantime, foreclosures and unemployment continue to rise, home values and the stock market continue to fall, and the credit market is at the mercy of the government.

There is little doubt that buying a home is normally a good decision. As real estate agents and financial advisors will tell you, home ownership has tax advantages. The interest paid on a mortgage is an allowable tax deduction. They will also tell you that real property is scarce, although in today's housing market there are plenty of foreclosed homes available, although the risk of buying a foreclosed home can be significant. They will also tell you that owning your own home is a secure investment and a way to generate wealth for future generations. This may have been the case for a housing market that behaves rationally, but today's market has been turned upside down, creating a situation where the risk of investing in a new home, always a long-term investment, is significant. Whereas you previously could depend upon rising home

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