Should you buy a house?

My dad keeps asking me when I'm going to buy my own house. My answer is when I decide where exactly I'm going to settle for the rest of my life. Based on this Rent vs Buy Calculator, a modest Bay Area home selling for about $400k would never see a return over the next 30 years given the current market conditions. In fact according to Yale Economist Robert Shiller, the housing market has a chance to fall farther than the 30% drop experienced during the Great Depression (see chart above).

Not to pour salt in the wound, but the reason we are experiencing this current recession is because of all the foreclosures. Banks are closing down on Wall Street because they were loaning money out to people who were not qualified nor responsible enough to make the required mortgage payments. The idea of "flipping" a house instead of owning it became a get-rich-quick scheme that never reached fruition for many. The huge spike you see from the chart above clearly shows artificially inflated gain from housing prices, which means housing prices are overvalued and probably have a long ways to drop before it reaches its true value.

So sorry dad, but I'm not buying a house anytime soon.