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The key to homeownership

The news from the housing market is mixed. For example, the index of pending home resales dropped by 5.5 percent in April, the most in a year.

Home prices in 20 major cities fell by 2.6 percent in March compared to the same month a year ago, according to the Standard & Poor's/Case-Shiller index.  


However, the pace of price declines has slowed. Other housing market indicators from April suggest that the housing collapse is over, as I argue in this article for Kiplinger's.

Is it time to buy? Prospective buyers still have time to mull the question. The housing-market recovery is likely to be a long, drawn-out affair. Most people know the lesson from the boom and bust is that it doesn't pay to buy and own without conservative financing. ... Forget buying if you can't stay in the home for a long time -- at least 5 years.

But the answer really lies with how secure your job, your career and your household income are. The greater your financial insecurity, the higher the odds that you might have to pick up stakes and move to another part of the country for work. A classic way to slash expenses after losing income is to downsize into a smaller place. Taken together, the more your job and career are at risk, the more renting looks good -- and vice versa.

About the author

Chris Farrell is the economics editor of Marketplace Money.

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