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For Aaron Carter, a musician who was struggling to fit a drum set, a piano and three guitars into his 600-square-foot apartment in Phoenix, the math on owning a home finally began to work in his favor.

Rent for the apartment he shared with his wife: $615. Mortgage payment for a home with twice the space: $760. And the interest on a mortgage is tax-deductible. So they jumped at the chance to buy some elbow room.

"We figured that everything together, getting more space, getting out of the apartment life and also just the prices right now, it just was the perfect time for us as a couple" to buy, said Carter, 20.

For Americans debating whether to buy or rent their homes, the scales are tipping toward ownership. Because of the slide in home prices, low interest rates and tax incentives, renters are realizing they could handle a mortgage for a just little more money.

An Associated Press analysis of 45 metro areas finds the gap between the monthly mortgage payment on a median-priced home and the median rent has shrunk from $777 a month to just $221 in the past three years.

It could mean a quicker end to the housing-market doldrums, as renters buy up unsold homes languishing on the market.

In some metro areas, including Cleveland, Atlanta, Indianapolis and St. Louis, the gap was less than $100 a month. And home prices are expected to fall faster than rents this year, which means the gap should get even smaller.

In once-inflated markets like Phoenix, Las Vegas and inland swaths of California and Florida, where prices have tumbled more than 40 percent, sales are rising because first-time homebuyers are snapping up bargain-priced homes.

They are getting help from a federal tax credit that covers 10 percent of the home price or up to $8,000 for first-time buyers who earn up to $75,000 a year, or $150,000 for a couple. The credit expires at the end of November.

Cheap foreclosures in some of those markets are now drawing multiple bids. As supply and demand even out, home prices will eventually begin to rise. But for now buyers are having little trouble finding bargains.

Jere Ross, an Air Force vehicle operator, and his wife recently bought a four-bedroom, 1 1/2-bath house in Zephyrhills, Fla., a Tampa suburb, for $86,500 rather than jump into another yearlong apartment lease.

Ross, 23, used a Veterans Administration loan, which doesn't require a down payment, and got a 30-year mortgage at a fixed rate of 5.5 percent. His monthly payment comes to $700 a month, including property taxes and insurance - $110 less than he paid to rent an apartment nearly half the size.

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Real estate experts in many parts of the country are saying now's the time to buy.

That may seem paradoxical, with 30 percent more foreclosure filings this February than last, and the median price for homes in the U.S. falling 15-percent in the most recent report, to levels we haven't been seen in six years.

But bad times for many are creating great deals for others.

Early Show money maven Ray Martin weighed in on the Saturday Edition about whether buying is indeed the way go to now, and shared guidelines for anyone who does buy. Martin was the show's "Bargainista" for the day!

IS THIS A GOOD TIME TO INVEST IN REAL ESTATE?

Yes, it is, and for a number of reasons. For one thing, housing prices are declining just about nationwide. Plus, mortgage rates are at a serious low. Rates on a 30-year, fixed-rate mortgage are at a level we won't see again in our lifetime. Finally, if you buy before December 1, you'll get an $8,000 tax credit if you're a first-time buyer. For all those reasons, there's really never been a better time to go shopping for real estate.

DECLINING PRICES HAVE HIT SOME AREAS HARDER THAN OTHERS, MEANING YOU MIGHT FIND SOME REAL BARGAINS. WHAT AREAS SHOULD PRESENT THE BEST OPPORTUNITIES?

The areas that have been hardest hit by this housing decline will also provide new buyers with the best opportunities. The cities that saw the steepest declines in housing prices were all in California, Florida, Arizona, Nevada and Michigan. They fell for different reasons. California and Florida were really over-built. They ramped up their building until there was too much supply, not enough demand, and eventually, the market fell apart. Detroit, of course, fell with the collapse of the auto industry. But these declines also represent opportunities if you're looking to buy. The states you'll want to avoid are Utah, Montana, North Dakota, Wyoming and Alaska . They actually saw increases in housing prices, albeit small ones. That's not to say they've escaped the housing crisis. It just means it hasn't hit them yet.

Thinking about Buying or Selling a Home?

Encouraging signs of an economic turnaround continued in the month of June despite rising unemployment claims. Combined with the numbers from previous months, economists are calling an end to the economic contraction. While growth may still be further down the road, increases in existing home sales and mortage applications are showing a positive impact on the overall economy.

Bonnie Tamrack posts an update on the economy:

"The National Association of REALTORS® said existing home sales rose 2.4 percent in May to a seasonally adjusted annual rate of 4.77 million units from a revised level of 4.66 million units in April. May's increase was the first back-to-back monthly gain since September 2005. According to the ICSC-Goldman Sachs index, retail sales were unchanged in the week ending June 20. On a year-over-year basis, retailers saw sales decline by 0.9 percent. The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ending June 19 increased 6.6 percent to 548.2 from 514.4 the previous week. Purchase volume rose 7.3 percent to 280.3, the highest level since the first week of April. Refinancing applications increased 5.9 percent to 2,116.3."

Home sales and mortgage applications are helping to stimulate the overall economy. With government incentives set to expire in the coming months, eager buyers are hard at work doing their research and looking at properties.

Don't Foreclose, Short Sale your Home

If you can no longer make your mortgage payments and your home is now worth less than you owe on it, foreclosure may not be your only option. A short sale, in real-estate terms, is the sale of a house for less than what the owner still owes on the mortgage. If the lender agrees to a short sale, the rest of the homeowner's debt typically is forgiven. Lenders sometimes agree to the procedure in order to take a small loss and avoid the lengthy and costly foreclosure process. While there are some significant negative consequences to a short sale, an ever-increasing number of properties are being advertised with that label. Short sale: Win-win-win situation The beauty of short sales is that they can be a win-win-win situation for seller, buyer and lender. Here's how: * The seller gets out of the mortgage liability without facing bankruptcy. * The buyer gets the home at a reduced price. * The lender agrees to a loss it considers minimal without going through a foreclosure and being saddled with an unsalable property. While it may seem surprising that lenders would agree to accept less than what they are owed, they benefit from the process, too.

Ignore the Headlines

Thinking about buying or selling a home???

By Dan Kadlec

Famed Money Manager is perhaps best known for his timeless wisdom that you can beat the pros by focusing on stocks of companies where you either work or shop or have some other edge. But a more relevant Lynchism today is this gem: Ignore the headlines.

That's no easy thing. How do you tune out all the chatter and ink on recession, housing, subprime woes, the credit crunch, rogue traders, insolvent bond insurers, $100 oil and nukes in Iran? It's enough to make you sit on your thumbs and wait before making any big moves. But what, exactly, are you waiting for?

There has rarely been a moment in history when you couldn't scare yourself into doing nothing. And yet, as Lynch observed nearly 20 years ago, "in spite of all the great and minor calamities that have occurred ... all the thousands of reasons that the world might be coming to an end--owning stocks has continued to be twice as rewarding as owning bonds."

A top reason to not buy stocks, in Lynch's view, is if you don't already own a home--in which case, that should be your first investment, since an owner-occupied home is nearly always profitable. Through a spokesman, Lynch reaffirmed these views to me--housing debacle and all.

When prices are falling, few people have the discipline to buy stocks, a house, gold, art or any other asset. But those who do pull the trigger excel in the long run. As John D. Rockefeller famously said, "The way to make money is to buy when blood is running in the streets."

And the streets are stained crimson. Start with stocks. They have been pummeled this year. GDP braked sharply last quarter, and there has been plenty of panic about a recession. The Federal Reserve is slashing short-term interest rates at the fastest clip in decades. But if you stick to your steady, diversified plan while everyone else is retreating, you will be happy years from now. For one thing, Fed rate cuts always lift the economy eventually, and the stock market typically starts responding just as headlines get gloomiest. Sure, the market could fall again before recovering. But the recession may be half over already--or we may avoid one altogether. You just never know.

As for housing, certainly some skepticism is in order. Formerly sizzling markets in Florida, Nevada, Arizona and California probably haven't seen the worst headlines just yet, though they may well be close. And "jumbo" mortgages, those more than $417,000, are likely to remain artificially high for a few more months while banks work through their credit issues.

But let's say you are emotionally ready to be a homeowner. You have good credit, plan to stay put for five years and have been waiting for the perfect entry point. It's time to get serious--before an inevitable rise in interest rates wipes out your advantage. "The thing that will make home prices stop falling is the very same thing that will push mortgage rates higher," says Jim Svinth, chief economist at mortgage firm Lending Tree. So anything you gain by a further drop in prices might be offset by rising financing costs.

Consider a typical home that sells for $218,900. You put down 20% and get a 30-year fixed-rate mortgage at today's rate of 5.5%. Monthly principal and interest come to $994.31. Let's say that 12 months from now the same house goes for 10% less, or $197,010. But by then the recession is history and the Fed is jacking up rates to stem inflation. If mortgage costs rise a point, to 6.5%, your monthly payment would be $994.94 and you'd have saved nothing. Meanwhile, home prices might steady and sellers might become less willing to negotiate. And you have spent a year living someplace you'd rather not be.

It's more complicated if you must sell before you can buy. But that logjam won't persist forever--and if it appears you'll be trapped for a few years, try to refinance at today's lower rates. Risks always seem most acute when the headlines give you ulcers. But that's exactly when you should think long term--and get off your thumbs.