“That is actually an easy one to ansWer. If prices have stopped going down, but still may take years to go up, why rent and give your money away? Why not better to buy now and benefit from deductible mortgage interest and building equity with each payment?”

First off, my basic premise was that home prices have NOT stopped going down, only that the rate of decline may lessen. Second, if one assumes prices have hit bottom, then owning is only beneficial if it is cheaper then renting (taking into consideration all costs and deductions), which is currently not the case. Therefore you are actually giving your money away to the bank. In addition, since renting is significantly cheaper the probability of a bottom is very low and the risk of losing a substantial amount of money purchasing a house are high.