The American Dream of home ownership may not be quite as dreamy as it once was.

Sky-high prices, risky mortgages, and job instability have made home buying a bigger investment than it used to be. For some folks, it's an investment not worth making.

I see people giving up the American Dream because it's not the reality they can afford, says San Francisco financial adviser Barry Taylor. Even people who can afford to buy a house may have reasons not to do so, he says. Lately he's been crunching numbers and telling some of his clients to rent instead.

Of course, owning your own home is still a great way to use leverage and build equity, and Taylor himself owns several, including some that he rents out.

In general, it's good to own your home, but there are some reasons not to. Here are some situations where renting makes sense.

-- If you don't have a downpayment. Taylor has doctor clients with good incomes who haven't been out of medical school long enough to save up a down payment. He has advised them to wait. Given their salaries, they can probably save the downpayment in a year. Even if the homes appreciate modestly, they'll end up with a lower monthly payment and a better mortgage. Mortgages for folks who have no downpayment are usually at higher rates and have extra insurance fees attached.

-- If you're getting a divorce. A common scenario when couples with children get divorced if for the husband to get the retirement account and the wife to get the house. She'll often cling to the family home as the center of familiarity for the kids. But she may need cash more than she needs the house, and the mortgage payments can dominate her future. Sell the house, settle the divorce, rent while you figure out where you stand and then shop for a new home if that's what you want.

-- If you're downsizing into retirement. This is tricky. Many people do want to own their homes in retirement, they just want less expensive homes and no mortgage payments. But if they tie up too much cash in the home, they may not have the money available to invest for future cash to fund the rest of their long-term retirement. Someone who sells their home for $600,000 and plunks down $400,000 in cash for their retirement home will only have $200,000 from that sale to invest for income. And with stocks averaging over 10 percent over the long term and real estate averaging 6.6 percent, according to the National Association of Realtors, the rent-and-invest plan could afford some people better retirements.

-- If you think you're going to have to move soon. If you think you may have to relocate, you may not be in the house long enough to make buying it worthwhile. People who bought houses in the hot hot 2003-2004 markets are now sitting on places they can't sell. In some areas, properties have been on the market for more than a year, and home sellers have to bring cash to settlement to unload a house. Unless you've got at least five years to stay put -- or you are looking in an area where you'd be able to rent out your home if necessary -- rent, don't buy.

Take a cold, hard look at your job prospects and your own housing market before buying a property with an adjustable rate loan. And rent, if you can't get into the house unless you go with an interest-only loan or one that allows negative amortization -- (keeping payments down but the amount you owe keeps going up). Just forget it and rent, until you're in a better place financially.

-- If you live in an area where homes are overpriced. How would you know that? It's not easy, but you can ask real estate agents in your local market what's been happening with sales and prices. You can check data at, the Web site for the National Association of Realtors. Then get someone to crunch the numbers for you, but remember that all professionals have their own agendas. Realtors will want you to buy. Financial planners will want you to rent, and turn over extra money for them to manage. Look at properties you like, collect the relevant data (property taxes, rental fees, etc.), and then compare the costs. You can use an online calculator, like the one at Freddie Mac's site to make your comparisons.

Remember that the big difference between renting and owning is this: After you've been making your payments for a few decades, buyers will own a house. And renters will just have another monthly bill coming their way.