Terry makes a couple of salient points.
One exception I'll take with his points is that in the US, people are levered in their homes due to taking out a mortgage. So, when a home's price rises, that lever is based on their down payment percentage. But as many have seen that works both ways. Suppose you have 3% inflation annually (and for the sake of argument, lets say it amounts to 15% in 5 years since we won't compound anything), a current purchase of 500,000, and a 100,000 down payment. Lets leave out closing costs, annual property taxes, maintenance costs, improvement costs, etc for now.
If the price rises equal to inflation, your house is now worth 575,000 after 5 years. Assume that you paid off about 10,000 in principal per year. Your loan balance is now 350,000, and you are able to sell the house for 575,000. In nominal terms, you have made 75,000. In real terms, you have made nearly 60,000 since 15,000 will be eaten up for inflation on your 100,000 down payment.
Now, lets take out 8% for your round trip buy/sell costs (46,000), property taxes at 2% per year (57,500 for 5 years), maintenance costs and improvement costs (5,000 at 1,000/year). That's 98,500. Hey, what happened to my profit?
Now, one would assume that one would save some money by buying over renting right? But you are 38,500 in the hole and that's with an annual price rise of 3%! So now, we look at rent costs versus mortgage interest costs: assume you paid 6% of the beginning home price in rent (30,000 in year one escalating by 3% each year, same as house price increase). You would pay roughly 160,000 over 5 years in rent. Sounds like a lot right and an awful waste of money right? Well, the interest only portio of your mortgage at a rate of 4.5% would be about 97,500. You need to add 38,500 to that. Now, since you had 100,000 in the house as a down payment, you lost interest on that money. Lets say you had put that in government securities yielding 3% so you could have made 15,000 over the 5 years.
After owning instead of renting for 5 years, and assuming that 3% increase, you make a grand total of $9,000 over 5 yeras by buying.
Now, what do I think (and I have a M.A. in Econ)? I don't think prices will go up 3% per year. I think they'll continue to go down for the next two years. I think unemployment will remain above 9% for the next 18 months. I think you'll see some inflation, 3-5% over the next 12-18 months due to a cheaper dollar but it won't be there in housing prices. I also think that the stock market will likely take a hit at some point after the election, which will also have a negative impact on housing.
In conclusion, it is my contention that, if your goal is to make money on your house, it is generally better to rent. If your goal is to absolutely make sure you break even, then waiting for 12 months may be wise.