Correct me if I'm wrong, but you're buying a house for a place to live, right? Then pay cash. Should prices continue to fall (which they may) or if something happens to cut your income, you don't have to worry about losing your home. Most people who buy a home with a mortgage do so because they don't have the money to pay cash. Millions of those people have lost or will lose their homes to foreclosure. Your home should NEVER be treated as an investment or an ATM to pay for other things.
You've also been told some things on this thread that are either incorrect or of dubious value.
You can't walk away from a mortgage without repercussions. If the bank forecloses and can't sell the house for what you owe, they can usually come after you for the difference.
Yes, a mortgage leveraged investment will make $ faster than a cash investment, but it also loses money faster. Because of the mortgage interest you must pay the downside is actually worse than the upside is good. The smaller the downpayment the more likely you will lose all (or even more) of your initial investment.
Property taxes are irrelevant in the cash vs. mortgage decision. They only matter when comparing different properties.
To those who said you must take greater risk for the opportunity of greater gains, sorry but that's not true. For example, the long term return for the stock market is 8-9% while it is 5-6% for gold, but gold is much riskier. The long term return for CD's is about the same as gold's, but there's virtually no risk.
If I were you, I'd pay cash for the house. Put the $1,000 you were paying for rent, into an investment account. Educate yourself about investments, then start investing the money you're saving.
Good luck!