And as a homeowner pays less each month toward interest and more toward principal, the deduction will shrink - until it falls below the standard deduction, which rises to keep up with inflation, Baker said.
Of course, paying principal builds equity and is the equivalent of a forced savings plan, which can finance big expenses such as college tuition. In the long run, many people fund their retirement partly by selling a home they've owned for many years and moving into smaller, cheaper housing.
Another reason to buy a house is it's a leveraged investment; you pay only a fraction of the price with your own money, which can produce an enormous return.
It would be nice to say home prices rise reliably and steadily - and a few years ago they seemed to. But that "sure thing" is no longer.
Short-term prospects are cloudy. Many economists expect home prices to keep falling through 2010 as mounting unemployment, foreclosures and a glut of unsold homes all weigh on the housing market.
Robert Shiller, a Yale University economist and co-inventor of the Case-Shiller index, says he expects home prices to be roughly flat for five years.
Yet housing has proved a good investment if you stick with it. And with prices already having fallen so far, buying now could make it an even better one.
