Reading the up to date news articles of the time will give you great insight into the emotional state of the market. A broad glance is essential because it will show the overall market mood.

It is both easy to tell a bubble has formed and difficult at the same time. It is easy because you will start to see TV shows on the subject with a similar title to: “How to make a fortune doing XYZ.” Generally, when everyone knows about something, the bubble is on its last leg, it will make some severe climbs and then crash like no other.

The media will be so saturated with this type of hype that most of the country would agree that the particular area is a good investment. The problem is that when everyone thinks the investment is good it means that there is likely little room left for growth and a ton of room to crash.

At the end of the bubble crash, there is a drawn out period of despair which can be easily identified. When you look at every newspaper and there are headlines about how terrible things are, it could actually be a good sign, one of opportunity.

Just like how when everyone knows that something is good, there is no more room for growth. Well, at the bottom of a market crash there is ONLY room for growth. Right now we are in a period where the despair is dying down, but people are still either too scarred or too poor to do anything. Many people want to buy but cant because they cant afford it.

In my opinion the choice should be obvious when you compare renting to buying. When you rent, you pay money every month to someone but you don’t have to worry about maintenance. They take some of the money to cover expenses, some of it to pay off debt and the remainder is either a profit or a loss. This is not including the effect a change in market price will have on equity.

When you own your home you will likely end up spending more money every month to start. After few years or so your monthly expense as a home owner will likely be less than the monthly expense of those renting a place with a similar amount of space.

Over the years you will build up equity in your home that you can use to your advantage but if you were renting you would not have built up any equity.

But, if you own your home and assuming you have not taken out any more mortgages, you will pay roughly the same amount year in and year out (especially in California). Because your debt payments will always stay the same (depending on your type of loan). You will only need to pay the increase in associated fees.

Over time you will have paid off your mortgage and will only need to pay property taxes. If you were renting you will have built up no equity and also would be paying more per month as well.

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