To Buy or Rent; That is the Question.

We are stilling waiting on a response on a short-sale in Frankenmuth, but we are not very optimistic. House hunting has just not gone our way, and because of that we have had a lot of time to gain a better understanding of the local housing market and to question our motives: are we buying just to buy, without really looking at what makes the most financial sense for us right now?

Right now houses in the area are overpriced. Some are selling, but not that many. When the tax credit goes away, we (and experts around us) believe prices will plummet. So, we don't think we are going to try for the credit any more. But, prices are not gaining around here either. Even with the possibly inflated prices, those are not any higher than they were five years ago. So, we know we will want to leave the area and we were looking at a five year (or so) timeline. We can't expect our property to gain much value. We can't really have any certainty that the house will sell for enough to pay off our debt and have anything to put down on another house. In fact, it seems unlikely.

We also would prefer to live closer to the university, but all the schools over there are substandard. So we have also been wondering if we want to send Gabe to the Lutheran school anyway. In that way it wouldn't matter to us what the public schools were, except for purposes of resale. It would be crazy to buy a house in an area where no one wants the schools when I know it's not going to be long term. But, because of that logic, I can't live where I want to live. Unless...

We rent. Then I don't have to worry about the bad market or the schools. I can live where we want, send the kids to the school we want, and walk away when we want. The downside remains not having any decorating control, probably still not having pets, and although interest rates won't likely jump super high quickly, it means not taking advantage of all time low interest rates. (5.1% on 30 yr. fixed rate mortgage) Nationwide, the housing the market is expected to be shaky through at least 2011. Here in Michigan unemployment is 14% with little to no prospects of turnaround anytime soon. We don't like it here. We would probably be crazy to buy right now. I think....

What would you do? I know we have to decide for ourselves, but it would be interesting to hear some one else's perspective.