I bought a house last month. I had been a long-time advocate of renting rather than buying, so what drove me to buy a house now? Has the time come to buy a house as an inflation hedge? Buying a house should be a matter of risk, not price.

The conventional wisdom states that paying rent is like throwing money away, whereas buying a home builds equity. Let’s re-examine this.

Over the weekend, a friend of mine sighed in resignation: “Given that my stock portfolio is down 40% and the real estate market in my area is down ‘only’ 20%, we would have been better off buying a house last year.”While the numbers she quoted may be a fairly accurate reflection of the situation in the San Francisco Bay Area, her conclusion could not be further from the truth. Had she bought a house last year – unless she paid cash – she would be much worse off than she currently is.