Kristopher, you are only 26 so renting has many advantages. If you have a good salary and prices seem out of reach, then homes are clearly over-valued. Whether you believe we’re in bubble depends on your definition of a bubble.
Your instincts are sound and you seem financially responsible. If you choose to wait, the macro things I’d be watching are interest rate rises, increased inventory, and investor activity. If prices wobble, I’d focus on price reductions, list to sales ratios, number of days on market, Cash Shiller index, and median prices. I believe there is fair to good chance a convergence of factors will happen to bring about a correction in prices and when that happens you might expect the excessive 2013/14 gains to be wiped out. Those gains did not come about as a result of wage growth or a post bubble over-correction, so it is entirely reasonable to assume they are unsustainable.
While measures of value help explain ‘normal’ prices, over-inflated values are more explained by buyer behavior (irrational exuberance etc), IMO. The buy now decision ultimately boils down to whether you are eager to be a home owner and are prepared to take a risk and make compromises, or whether you are concerned about fair value and believe you can time the market. It seems to me your post has already answered that in part.
