The dramatic growth and popularity of apartment living indicates that despite the lure of homeownership, many tenants are happy renting -- at least for now. At the same time, our national endorsement of homeownership hasn't eroded by any means.

The results of Fannie Mae's 2000 National Housing Survey are telling. The proportion renters who agree with the perception that "now is a very good time to buy" stands at 19 percent -- down 20 percentage points from 1999. Their sentiments don't appear to be permanent, however; more than 60 percent of all renters, the survey indicates, believe they will become homeowners within the next three years.

But is not the right time for you to buy? Before the search begins, however, a number of scenarios can signal that perhaps the time isn't right for a renter to become a homeowner. Among them:

Lifestyle changes. The transition to homeownership often requires keeping a closer eye on one's expenditures. The disposable income once allocated for annual vacations and other entertainment is, in some cases, now allocated for mortgage payments, property taxes, insurance and home maintenance.

Making lifestyle adjustments doesn't necessarily mean that renters should postpone home purchases, however. While monthly housing costs are likely to rise, annual tax bills are likely to fall. Smaller tax bills -- sometimes much smaller tax bills -- can mean more dollars are available for personal spending. For specifics, speak with financial planners and tax professionals.

Employment. Barring an unforeseen downsizing, prospective buyers should be satisfied in their current positions, confident in their plans to remain there, and certain they can find a replacement income if today's job disappears. If you have doubts and uncertainties, now may not be the best time to buy.

Time. This may the most influential factor determining a renter's readiness to buy. It costs money to buy homes -- and to sell them. The result is that you don't want to sell quickly because not enough time will pass to recapture your buying and selling costs.

"Unless house price appreciation in the first few years of ownership is sufficient to fully offset these costs, renting is generally the better option," says David Jones, director of communication and senior editor for the Real Estate Center at Texas A&M University. Jones adds 49 percent of homeowners have remained in the same house for ten years or more, compared to just 12 percent of all renters.

Peer pressure. Lower interest rates, combined with the knowledge that "everyone" is buying, can inspire "impulse" home purchases. Rather than doing what everyone else is doing, do what's best for you.

Unfamiliar territory. A cross-country move for a job transfer or because of a mere sense of adventure may not be the best time for a home purchase. Get to know your new community first, see which areas best suit your needs and budget. Consider a short-term apartment lease if you're uncertain about buying options.

Timing the market. Some buyers try to time purchases for the market bottom. Such market timing has generally proved unsuccessful with stocks and has no more appeal in real estate. The catch, of course, is that no one knows what the future will bring, thus no one knows where the top -- or bottom -- of the market will be found.

Similarly, some renters feel pressured to buy when mortgage rates have dipped or market conditions are favorable, forgetting that these positive factors aren't a one-time occurrence.

Changing marital status. A divorce is an unpleasant event even when "amicable." It's often not the time to buy a home for both financial and psychological reasons.

Recent credit disasters. A recent bankruptcy or a string of late payments may doom you to higher mortgage rates. In some cases, the better option is to re-build your credit standing and then buy.

Notice a pattern here? The reasons not to buy tend to be short-term. The reasons to buy remain in place. To obtain tax benefits, the possibility of appreciation, and the pleasure of ownership buying is the ultimate goal for most renters -- just look at the Fannie Mae study.

For more articles by Courtney Ronan, please press here.

Published: May 8, 2001

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