Uboy, it's an investment decision just like any other asset, and it's staggering people who invest in shares still don't understand that. When you can rent an "equivalent" property say for example $1,000 less per month versus buying (ie the asset is overvalued), the investment decision is to rent and invest the savings. What are your economic benefits of payig $1,000 more per month for a roof over your head than you have to?
I'm not saying you rent for 25 years and never buy (though actually it could theoretically happen), i'm saying you buy when the cost of renting is the same as the cost of owning or close enough that the benfits of paying a bit more to own are worth it. When you are paying alot more to own, it's a poor investment choice, when you can save the difference.
YOU BUY WHEN RENTING IS NO LONGER ECONOMICALLY BETTER THAN BUYING. This will happen one of three ways:
1. Rents rise until the cost of buying and renting are commensurate or the premium for buying isn't so large.
2. House prices fall until buying is cheaper or equivalent to renting.
