You're still looking at it in the short term. A decision to buy/rent should be made based on the fact you might actually spend a few years there. By which time your repayments will be far less than the rent you would have to pay.

...or perhaps not. If you bought in Seattle five years ago, you'd still be on the wrong side of the rent/ownership equation (rents have risen about 5% per year here, whereas houses were expensive relative to rent even in 2003).

I grant you that if you own long enough, your costs will someday be lower than renting the same space. But that's a tricky calculation, and your break-even point depends heavily on your assumptions for inflation, rent increases, interest rates, etc. And over the five-year timespan that most Americans own a particular home (very few people spend 30 years in the same house anymore), it's not even worth considering -- you'll lose far more money to interest payments in the first five years or a mortgage than you'll gain in savings over rent.

My point is that we can both be right. Eventually you'll break even on monthly costs, even if you buy at today's bloated prices. The question is, how long is "eventually"?

It's because landlords bought pre-boom that it's cheaper to rent now. It has nothing to do with what you should do today, just a little background to the situation.