Think of it this way – if you rent now, you can always buy in 1 year. If you buy now and prices drop, you are really, really stuck. You won’t want to hold onto a depreciating asset and you won’t want to sell at a loss.
The key to this decision is flexibility. Renting offers you flexibility to change your mind later. Buying doesn’t. And, if financial hardship strikes, you will be screwed as a homeowner.
So, in your spreadhseets, consider a scenario where prices drop 25% for 7 years, then grow at the rate of inflation, BUT you are forced to sell due to financial hardship in year 7, then rent for the next 5 years while you put your life together.
