“With home prices nearing a double-dip and more foreclosures expected to flood the housing market over the next two years, the decision between renting and buying a home across most of the country has clearly moved in favor of buying,” said Ken Shuman, head of communications at Trulia, in a press release. “As we head into the summer buying season, those looking to buy a home should be encouraged by improvements in the market and feel optimistic about their chances of finding an affordable home, much more so than in previous years.”

Areas with the most affordable housing market conditions tend to be cities hardest hit by the foreclosure crisis, including Las Vegas, Phoenix, and Miami. Meanwhile, those with more affordable rental markets included New York City, Los Angeles, and Seattle. Omaha, San Jose, and Detroit had some of the largest quarter-over-quarter jumps in favor of homeownership.

Despite the overwhelming data supporting home buying this season, experts emphasize that above all, the real estate market is local. “This metric is a good baseline for the rent versus buy decision, but it doesn’t capture everything,” says Jonathan Miller, president of New York City-based Miller Samuel Real Estate Appraisers. “Locally, it may be cheaper to buy then rent, but that doesn’t speak to your investment. In other words, how many years before I can ‘get above water,’ or see a return?”

The time factor is one of many stumbling blocks preventing house hunters from making the jump from window shoppers to homeowners, Miller says. During the housing boom, homeowners were virtually guaranteed to make money or at least break even on their home sales, regardless of the period they owned the home. In today’s market, experts see home prices appreciating much slower, therefore home owners will have to make a longer commitment to their housing investments than in previous years. “The future upside is much farther down the road,” he says. “You’re looking at five, maybe 10 years out of this sort of rocky bottom.”

Until consumers regain confidence in the housing market and economy, Miller and others expect the rental market will continue to benefit from apprehensive house hunters. “There’s been some erosion in attitudes toward homeownership,” says Eric Belsky, managing director of the Joint Center for Housing Studies at Harvard University. “There’s two parts to the home buying decision: the will and the way.”

Belsky says the spike in home prices and increased housing market activity following the first-time home buyer tax credit in 2010 demonstrates pent-up demand, but that the market isn’t currently providing enough incentive for house hunters to make a move. “The ‘way’ right now is really being blocked by the underwriting standards being applied to loans,” he says. Even if some of the slack in the market tightens, the rebound won’t be as strong as it would otherwise have been, Belsky says, primarily because many would-be home buyers won’t be able to qualify for a loan with favorable terms.

Despite the numerous obstacles for prospective home buyers, experts remain confident that improving employment and economic data will breathe life into the housing market this spring and summer. More Americans signed contracts to buy homes in March, according to the National Association of Realtors’ pending homes sales index–up 5.1 percent–a signal that could mean more house hunters are snapping up bargains. “We’re sort of in that in-between phase,” says Heather Fernandez, vice president of marketing at Trulia. “People aren’t running out to buy that dream house yet because they’re not that confident. But we’re starting to see consumer confidence shift, people are more interested in home buying, rental rates are still high, and therefore, just based on the numbers, increasingly homeownership is becoming more affordable across the U.S.”

- Meg Handley

Shadow inventory continues to climb, and there is now an eight-months supply of these homes, according to CoreLogic (CLGX: 18.52 +0.49%).

The data analytics firm said the number of homes seriously delinquent, in foreclosure or REO and not on multiple listing services rose to 2.1 million units as of August, up from 1.9 million, or a five-month supply, a year earlier.

“The weak demand for housing is significantly increasing the risk of further price declines in the housing market,” CoreLogic chief economist Mark Fleming said. “This is being exacerbated by a significant and growing shadow inventory that is likely to persist for some time due to the highly extended time-to-liquidation that servicers are currently experiencing.”

The visible inventory of new and existing homes through August remained flat with the year ago at 4.2 million units and is now at 15 months of supply, CoreLogic said. But the increased shadow inventory boosted the total supply of unsold homes by 3% to 6.3 million or 23 months from 6.1 million or 17 months.

“Although it can vary and it depends on the market and real estate cycle, typically a reading of six to seven months is considered normal so the current total months’ supply is roughly three times the normal rate,” according to CoreLogic.

The company said Florida, California and Michigan continue to have the highest ratio of delinquent properties to sales, and Texas, “which largely bypassed the housing boom and subsequent bust,” has the lowest distressed supply.

Earlier in November, Altos Research said the impact of shadow inventory looms large on the housing market. The firm reported steep declines in housing prices in the areas hit hardest by the bubble burst of three years ago, while Amherst Securities said default rates rose for the first time this year in October.

In September, Standard & Poor’s said shadow inventory represents one-third of the nonagency residential mortgage-backed securities market and will negatively pressure housing prices until the backlog clears in more than three years’ time. Analysts expect it to take 40 months to work through the inventory of mortgages.