Rent or Buy?

With home prices continuing to slide, a handful of Americans are finding themselves in the catbird seat, trying to decide whether to rent or buy their next home. Pundits are offering advice, realtors and homebuilders are offering incentives, and the media are dissecting and mapping price-to-rent ratios in cities across the country. Ignore them all. This is a decision that does not require a calculator, but instead an honest appraisal of your life. Only if you meet the following five criteria should you consider buying a house:

1. You love where you live. Buy a house only if you know without a doubt that you want to live in an area--and in a house--for the foreseeable future. Typically, the advice is to buy if you plan to live in an area for at least five years. This is laughable today. You should think decades, not years. In many areas, it takes years just to sell a house. So forget the "starter home," shrewd investment, and flip-this-house concepts. All are out of date. Buy only if you do not plan to sell--ever.

2. Your employer loves you. Buy a house only if you know without a doubt that you have a job or income stream for the foreseeable future. How many working Americans feel that way? Only 52 percent, according to the latest General Social Survey. With the economy still in ICU, even those who think they have job security may be in for a surprise.

3. The economy loves your employer. Maybe your employer really does love you, but does the economy love your employer? If the answer is yes--no matter what Steve Jobs happens to invent next--then you might consider buying a home.

4. You love your spouse (and your spouse loves you). Buy a house only if your marriage will outlast your mortgage. Also, make sure your spouse meets criteria 1, 2, and 3.

5. You can afford the commute. Buy a house only if the commute will not crimp your lifestyle--no matter how high the price of gasoline. House prices may be low in the farflung suburban rings, but you will be trapped in a gasoline ghetto.