Byline: C.j. Moore

Ask anyone in the mortgage or real estate industry how to avoid buying a house that will end up underwater, and the immediate response is a cackle and quick-witted retort. "You would need a crystal ball for that" is the most common response.

The uncomfortable fallback to humor is warranted, considering the fact that 11.2 million homes in the United States are underwater, according to a CoreLogic study done in May. A majority of those homeowners probably never anticipated that the American dream would turn into the American succubus.

Real estate was once a sure bet. Now our government has to entice homebuyers with tax credits, and with the tax credit gone, homebuyer confidence has dwindled. Pending home sales in September dropped 24.9% from the September 2009 numbers when the tax credit was available, according to a recent report from Realtor.org.

But the reasons to buy have not entirely disappeared. There is the low-hanging fruit that anyone in real estate can dangle in front of prospective buyers-interest rates remain at all-time lows and prices have fallen as well.

On the flipside, there is the argument that it's better to rent than buy. Why build a landlord's equity instead of building your own?

It's tough to build equity when you buy a house for $200,000, put down $20,000 and a couple years later the home is worth $100,000. That's not a far-fetched example with what has happened the last few years. Add the fact that you're locked into a higher rate and cannot refinance, because most lenders are not going to refinance a home that is underwater, and that's reason enough to be wary of buying.

So if you're in the market to buy, should you just run out and rent instead? Not necessarily. Sure, things have changed, but in the long run, the changes should just make Americans more careful.

"It needs to be sort of that old school, I want to be here approach. I want to put roots down," said Kathy Partak, who...