To rent or to buy? The story of two couples

These days, the biggest concern for many potential homebuyers isn't what to buy — but if they should buy at all.

While some worry about falling home values, others wonder if the current housing crisis provides a rare opportunity to get into a house that will soon shoot up in value.

The best thing to do is not think of a house as a short-term investment, says Danilo Pelletiere, research director for the National Low Income Housing Coalition, based in Washington, D.C.

"Ask yourself if you will feel really badly if you buy a house and it falls in value," says Pelletiere. This won't happen if you are buying for the right reasons — because you like the house and plan to stay for a while.

We found a renter and a buyer in the Seattle area who agreed to share the story of how they made the decision.

Happy to be renting again

The decision to sell their house and go back to renting has meant more time and even more money for Jill and Dan Keto and their family. Once spending $2,500 per month on a mortgage for a house in Issaquah, they now spend about the same to rent a house on the Eastside and feel it was the right decision. That's because as homeowners, she and her husband found that they were spending hours of their free time on weekends working on the home, making repairs and feeling chained to the house. It's a side of homeownership that nobody talked about much when values were rising: the cost of maintenance, upkeep and repairs.

Since becoming renters, the Ketos — Jill, her husband and two young children — have been able to spend more time together instead of working on the house and they don't have what Keto calls the "burden of enormous debt" hanging over them.

The Ketos said that friends were initially shocked that they would sell it all and move into a rental house when they could easily afford to own a home.

Jill Keto has a background in mechanical engineering and is now a full-time author who recently published a book on coping with a recession ("Don't Get Caught With Your Skirt Down: A Practical Girl's Recession Guide"). Her husband is an economist.

"People couldn't believe it when we did this, but our happiness level has actually gone up," says Keto. "I plant flowers in the yard just like everybody else, our kids play with the other kids in the neighborhood just like everybody else — but now we have a lot of free time and can be happy without worrying about a huge amount of debt."

Eventually, the family plans to buy a house again. Both Keto and her husband think that the real-estate market will continue to fall.

"The point is, putting money into a house is not a wise allocation of funds right now," says Keto. "And just because you have a home does not mean you will be happy."

These buyers plan to stay put

About the same time the Ketos were going from owners to renters, another 30-something couple and their 3-year-old Great Dane mix went the other way.

After renting an apartment on Capitol Hill for several year, Shana and Michael Graham decided to buy their first house. One of the reasons they made the jump was because they saw prices falling.

They bought a new town house near where they rented that had been reduced by $100,000 and in the neighborhood they loved. That weekend, all six units in the town-house development sold. Without a drastic price decrease, they don't feel they would have found such a great place they could afford, yet they still worry a little bit.

"The real-estate market is so volatile, but it makes it a little less scary because we plan to be there for a while and things should go back up," says Shana Graham. "That's why I feel OK about it even though things are crazy right now."

Anyone who plans to live in their house for five years or more would still be safe to buy, according to Pelletiere, who says that rule of thumb still applies even in this declining economy.

And the Grahams plan to stay in their house for a long time. They weren't out to make a quick profit."We didn't go into it with the idea that we were going to win the lottery," says Graham, who works as a public-relations consultant.

She and her husband, an attorney, now pay a $2,600-per-month mortgage and feel good about their timing.

Michael Graham says it helps to remember that the estimated value of a property shouldn't be a concern if you don't plan to move anytime soon.

"You have to think of it as perceived value until you really have to sell it," he says, comparing the housing market to the stock market. "It's just a perception at this point about how much you would make or lose because it's always changing."

The couple describe themselves as pragmatic about making decisions and knew that buying a home wouldn't necessarily make them happier, but they didn't expect to feel so good about owning a place.

"It's hard to describe without sounding hokey, but you feel really good about it and that feeling of being in your own home," says Michael Graham.

The Grahams also like the tax deduction, and feeling more connected to their neighbors, and "not having to pay someone else's mortgage" as a renter, as Michael Graham put it.

They said they can't think of many drawbacks to owning at this point as long as they remind themselves that they don't have to sell it anytime soon.

But the one unpleasant surprise was a property-tax assessment they received a month after moving in.

It showed that the value of their house had jumped and they owed more in taxes than they expected.

"But that's OK," says Shana Graham as she looks at her husband. "It will all be OK."