the Moraga guy is right. You can enjoy the amenities of the community and be a renter. Frankly, I'd love to have an investment home that I could rent out, and have someone else (like John, below) pay my mortgage, while I sit and wait for the market to turn around, while I utilize the deduction, and gain the eventual equity.
However, do your due diligence - What will your income taxes be with the mortgage deduction, and without it? Run Turbo-tax or something similar, and put in the two scenarios. No deduction versus practically the entire mortgage payment for the whole first year as a deduction (you pay very little principal in the first years, and it is only the interest that is deductible.) Decide for yourself what is better for you.
Secondly, how much more do you think the market will fall? 10%? Then offer $900,000 on that $1,000,000 house, and get it and enjoy the tax deduction now. If they won't take it, find another house, and hope that your guess of the market falling by that much is right.
How long are you planning on staying? If fewer than 3, think hard. No one knows how long the market will stay undecided, and how long it will take to recover, though in one year (1999 into 2000) the market rose 20% in some areas. If more than 3 -5 years, buy while the market is low and the interest rates are low, and while you can negotiate the best deal, and have a house you can live in, enjoy, and make your own. Do you care about what house you live in? What if the house you love is for sale now? Are you willing to risk that it will still be for sale in the fall? Or, if you feel that there is always another house, then wait. A house is more than an investment, it is a home.
And to address John's point, some of us Realtors really do care about our clients, really do want a client for life, and not just one deal. It doesn't benefit me to talk people into buying (as if any of you would do that anyway) if the time isn't right for you. I want my clients to be happy now, and happy in 3 years or 5 years when they move up or out, so they call me again. I don't know what John's problem is - maybe he was talked into doing something he regrets.