Erica Douglass has written a nice post about the current U.S. real estate market, When Should You Buy Real Estate — And When Is It Better to Rent? It should be especially interesting to anyone who’s thinking about buying a house now, or anyone who’s concerned about housing prices.

She looks at two metrics (house prices as a multiple of median income, and house prices as a multiple of monthly rent), and concludes that houses are still overpriced in her city (San Jose). She also predicts that the housing market will reach the bottom in late 2010 to 2013.

I always pay attention when someone analyzes house prices with numbers instead of feelings. But one thing to keep in mind is that every situation is different, so be sure to plug in your own numbers. Whenever I see someone say that now isn’t a good time to buy, renting is better than buying right now, buying is always a bad deal, etc., I plug in my own numbers and confirm that I would have been crazy to rent instead of buying. I realize that for some people in some markets it’s better to rent, but that’s never been true for me.

By the way, why does it matter if it’s a good time to buy? Most likely, you’d be selling one house in order to buy another. If it’s a good time to buy, it’s a bad time to sell, and vice versa. You win one, you lose one.

The main exceptions are if you’re entering or exiting the market. If you’re buying your first house, you definitely want a buying opportunity. If you’re selling your house and renting, you definitely want a selling opportunity. Other exceptions are if you’re trading way up or way down, or if you’re buying and selling in completely different markets. But other than that, do you really care about house prices?