Have a Finance Question? Ask a Financial Expert Online.
While it is generally a good idea to not "throw out money on rent", many times that one is in a transitional stage, it is the best idea.
For someone in your particular situation, it would be difficult to recommend putting a significant amount of your personal net worth into an illiquid asset such as a house.
I would recommend that you keep that money in relatively liquid assets until such time as you have a clearer picture of your future including location, employment, and other related issues.
Thank you for providing additional information. I understand and appreciate your insight into the real estate market due to your experience.
My personal opinion is still that not all of your net worth should be tied up in your residence, particularly from a liquidity standpoint. While a particular market or area may be "hot" at any given time or for a long period of time, there is still a longer and more involved process in getting your money out of it than in other investments.
A good money manager should be able to produce a low/moderate risk return of 8-12% by using an asset allocation portfolio that is suited to your investment horizon. The recommendation of a specific asset allocation model or specific investments is not something that should be done in a forum such as this, just as you cannot recommend a particular piece of real estate for me to buy. Nor would I recommend that you, on your own, select a particular mutual fund and put all of your money in that. That conversation should occur between you and someone that you either have some knowledge of and trust in or can get that knowledge and trust with.
Here is a link to a "number cruncher" http://www.dinkytown.net/java/MortgageRentvsBuy.html that will help you factor in the investment return on the money not used in the acquisition.
Let me know if I can be of further assistance.