You need a place to live, but should your buy or rent? Prices have crashed from their peak and mortgage rates are low. It seems like an ideal time to buy.

Maybe it is, but it's going to depend on a number of factors. For starters, you must think about how long you plan to live in one place before moving.

Even though home prices are down 30 percent or more in most area, that doesn't mean they have stopped going down. Many housing analysts think home prices could go down another 10 percent this year.

So a house you buy today might be worth a bit less next year. Not only that, it's value may stay stagnant for a few years. At the height of the housing market, you could expect a home to gain 10 to 15 percent in value each year. Those days are long gone.

Costs of owning a home

When deciding whether to buy or rent, it isn't enough to compare the monthly mortgage payment to the rent payment. You have to factor in other costs associated with owning a home, beginning with the closing costs when you buy it.

When it comes time to sell the home, there are also costs associated with that, including a brokerage fee for the real estate company that handles the sale. In between there are taxes, repairs and insurance. On the plus side, however, mortgage interest is tax deductible.

There are fewer costs associated with renting, except that you can count on your rent going up around five percent every year. So if you start off paying the same amount in rent as you would pay for a mortgage, within a few years you will be paying substantially more.

Economists have developed a formula to sort out the financial pros and cons of home ownership and renting.

Non-financial factors

Besides dollars and cents, there may also be some psychological benefits to owning your home. Owning your home may provide a greater sense of community and stability. You are also free to redecorate a home that your own, or make changes to the landscaping. If something needs repair, you don't have to wait for the landlord to get around to it.

But if freedom and less responsibility are more important to you, then there are benefits from renting. You aren't responsible for maintenance and, if you feel like moving in a year, there is nothing holding your back.

Also, the money that would be tied up in a down payment remains in your bank or investment account instead, available when you need it.

It was one thing when home values were going up every year and homes sold almost as soon as they were listed. Owning a home was profitable and much less confining. Today, you should plan on owning a home for several years if you make a purchase.

Perhaps for that reason, homeownership appears to be on the decline, whether voluntarily or because consumers can't get a mortgage. According to the U.S. Census Bureau, 66.5 percent of  U.S. households owned their home at the end of 2010. That's down from 69 percent at the end of 2005.