Excellent post!!!. Some more points:
1. If the reality market shoots up, in the 10 yr period here are some possibilities:
a) May not be able to rent at the budget that one may have planned. It may become costly to rent.
b) If one buys home at high prices, the emi's also go up and one will end up with higher loans and more worries
2. If the real estate tanks
a) rental values also will decline and savings can increase
b) Premiums on home prices will decline so that housing will become affordable
In essence it is always better to stay flexible and rent during real estate booms and plan for buying during real estate busts. Easier said than done.
One of my friends told me the following valuation method
Rent * 200 should be a fair price for a house anything above that is premium.
Regards,
lsjey
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