Subprime lending, credit crunch, repression – today’s news broadcasters fling these terms… Subprime lending, credit crunch, repression – today’s news broadcasters fling these terms around amid an increasingly pessimistic economic outlook. But what do these things mean, and more importantly, how do they apply to the average college student?

Well, if you’re graduating in the next year or two, chances are you’ll be putting that college diploma to use and finding yourself a decent-paying job. You’ll also need a place to live. With an upgraded financial outlook, deciding whether or not to purchase your own house becomes a reality. Only one question remains: should you?

If you listen to traditional wisdom or parental advice, most would say it’s the smarter move to own rather than rent. Rent is paid once per month to a landlord, and you will never see any of that money again. Buying means whatever money you put toward your mortgage each month, aside from the loan interest, will work toward increasing your equity.

The money you pump into a monthly mortgage essentially stays with you in the form of the house you purchase. On top of that, investing in real estate is something of a hedge against an uncertain market – even if the economy is down, your house will always be worth something. It seems like a simple, safe choice.

However, given the current outlook of the real estate market, you might want to reconsider buying that adorable Cape Cod across town with your first real paycheck. There are several factors unique to young, first-time home buyers, and the current market that could sway your decision.

First, consider the level of commitment involved in purchasing a home. If you are fresh out of school and decide to own, you’ll likely base what you can afford on the monthly salary you start with. Reasonable enough – but consider how many graduates make that leap only to discover the job they once thought was so secure really isn’t. Of course, no one actually thinks such a horror story will apply to them, but it happens all the time, leading to foreclosure and a total loss from the buyer’s end.

In fact, that situation, in addition subprime lending, is what has led to the current credit crunch. Banks gave out adjustable rate loans to customers with bad or no credit history. Many of these customers could barely afford these mortgage payments to begin with, and when their adjustable interest rates went up, so did their monthly payments, resulting in bills too big to keep up with and huge numbers of foreclosures.

Another big factor recent grads need to consider is job relocation. Many companies expect their young employees to be ready for a move should the need arise. If you’ve just bought a house but are now unexpectedly asked to move out of the area, you might have set yourself up for a loss. CNN Money suggests that in general, an average property needs to appreciate 10 percent in value to recoup selling costs and merely break even on a sale. In the case of job relocation, a quick turnaround in this market is unlikely to produce such results, leaving the homeowner to absorb the loss. If you are looking to purchase a house, you should plan on being there for a while.

Virtually no city within the United States is predicted to make any big gains soon. In fact, staying put might be the best thing a market could hope for in the next few years. Pittsburgh, however, might not be such a bad place to set up shop if you decide you are ready for the commitment of home ownership. Of all the areas in the United States, the industrial northeast – never having been prone to out-of-control real estate inflation in the first place – seems poised to hold its value best over the next five years.

In findings by Fortune Magazine, the projected value of an upscale home – one that sells for twice the local median price – will drop drastically over the next half decade. Cities that have boomed recently – Miami, Las Vegas, Sacramento, Calif. – are all predicted to be the hardest hit. Orlando’s home prices are predicted to drop more than 34 percent. Seattle is looking at a 20 percent dip in its home values.

The few cities set to hold their value in that same time frame include Cleveland, Detroit, Indianapolis and yes, Pittsburgh. Fortune calculated their numbers on the relationship between average home prices and average rents. During the peak of the real estate bubble, home prices rocketed upward while rent prices saw only modest increases. The deflation projected here shows where home prices will need to fall in order to return to traditional relationships with rent prices in the same markets.

So, while the economic forecasters continue with their negativity, it might be the smarter choice for single, young professionals to take advantage of relatively cheap rents while keeping financial commitments and responsibilities to a minimum.

E-mail Brandon at [email protected].