I toured Philadelphia’s Northern Liberties neighborhood with a friend who is house-hunting. Boy, there’s a lot going on there: big condo buildings under construction, old row houses being gutted and rehabbed, funky restaurants and bars popping up :

It made me want to get out of the bland suburbs and move to town. But is this a good time to buy – for me, my friend or anybody?

Like any small market, this neighborhood has its own issues. There still are a lot of dilapidated properties there. This is worrisome for a house-hunter – especially a first-timer such as my friend, who expects to be transferred out of town in four years or so.

On top of that, there’s been a lot of bad news about the housing market nationally. The National Association of Realtors said it expects the median existing-home price to fall 0.7 percent this year compared with a 1 percent gain last year. It said new-home prices should gain a miniscule 0.4 percent this year, compared with last year’s 1.8 percent gain.

Given all we’ve heard about the softening real estate market, the subprime mortgage meltdown, the risk of recession and rising interest rates, does it make sense to buy a home this spring?

Maybe – but only if you adjust to the new conditions. Generally, it takes healthy home-price gains – on the order of 5 percent or more a year – for buying to be more economical than renting if you don’t expect to stay put at least five or six years. When appreciation is lower than that, it takes even longer to break even.

A home is a great long-term investment but a terrible short-term one. To counter the kind of rising risks we see today, buy only if you plan to stick around seven, eight, even 10 years.

Consider an existing home purchased today for $250,000. To sell it, you’d pay $15,000 in commissions, assuming a typical charge of 6 percent. So the home’s value has to go up $15,000, or 6 percent just to break even.

But if the NAR projections are right, the price would rise only about 1 percent in the next two years, leaving you 5 percent down. Add moving and fix-up costs and other expenses related to selling and you’d be even deeper in the hole.

To weigh buying versus renting, check out the Bloomberg calculator at www.bloomberg.com/invest/calculators/rentbuy.html. Note that this, like others of its type, does not account for unexpected expenses you have as an owner but not as a renter, such as a new roof or furnace.