When should you buy a home?

Jeff, a loyal MR reader, asks:

I’m currently considering buying my first home.  I’ve aware of the condition of the current housing market, and am not counting on any appreciation to make this financially viable.  However, I still am not sure that a home purchase will maximize my well-being.  I won’t ask for a personal evaluation of my financial decision, but I am interested in where I should seek quality advice.  I’m afraid my realtor’s incentives are structured so that he would like to see a sale irrespective of what is best for me.  Is there a resource beside my realtor I should contact?  In general what is some practical advice to reduce the principal-agent problem in my daily life?

Like Robin Hanson, often my preferred mode is meta-advice.  Once you have received all the rest of your advice, in which direction are you likely to overweigh it?

My view is that Americans are more likely to overrate the value of buying a home, if only because they underestimate the probability of divorce.  It is also harder for them to imagine career opportunities in other geographic areas, plus many people overestimate the historic returns to real estate.

I can’t think of comparable biases that would favor renting, especially in our sub-prime, not so liquidity constrained age, which in my view has been dented only temporarily.

An alternative approach is to see the buy/rent decision as equal in value for the marginal buyer, and ask where you stand relative to the market margin.  Since this would be Jeff’s first home he is probably young and that also suggests renting.

Here is a good post on home ownership rates.  Here is a good Arnold Kling post on real estate.

Readers, what do you all think?