I would have to agree that the rental price represents a minimum price floor. In the really depressed areas the purchase option can be significantly cheaper even with a minimal amount brought as cash (think subprime parts of El Cajon or really any part of Chula Vista). However nicer areas seem to put that floor higher. That means you are break-even with rent at 10 or 20 or 30 percent cash.

I will use an urban example here. A 2-bedroom condo property in Hillcrest will sell for about $300k or so. It will rent for 1800-2000/mth. That means at 25% down, this will cash flow about evenly (depending on HOA fees). A property in Normal Heights of a similar character will sell for 220,000K and rent for $1600/mth. In other words it breaks even at almost nothing down. In this case you pay a value premium for the desirable location.

Boiling it down: What this means is you need to figure out what you have for a down and how close to rent you can bring your monthly payments. If you can find a place you like where you can buy and pay about as much in mortgage as you would in rent, then for christ sake’s, buy it.

Note: You will need a good loan officer (who is recommended and honest). Also, you will maximize your benefit by buying between September and February. That is when sellers are most stressed and likely to accept lower offers.