Hmmm. Two conflicting things here. On the one hand, based on this sketchy info, I’d suggest that now -- when the market for homes is soft -- might be a good time to buy one. I wouldn’t be surprised to see California real estate prices pick up again. I think it’s already happening. Relatively speaking, stocks are pretty high and some California real estate prices not so high. A better time to buy a home rather than more shares of Coke? (A decade ago, you would surely have done better buying the Coke than the home.)

Then again, if you’re happy where you are and can continue adding to your investment portfolio, keep squirreling it away! Have you read The Millionaire Next Door? They got rich at least in part by living beneath their means.

In any event, I wouldn’t buy the house for the tax deduction. It helps you afford the mortgage and property taxes, and should certainly be taken into account when you figure what home ownership would cost you. (Also take into account repairs, insurance, lawn maintenance, repairs, utilities, painting every few years, plumbing problems and repairs.) Alone, though, the tax deduction is no reason to buy a house.

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