in a perfectly efficient market, renting and home ownership costs exactly the same - not cheaper nor more expensive.
However, most home owners living in their home pay a premium for it, because they both want to secure their bid when they buy, and they are likely buying on more than just financial implications (like the location is great for their kids, etc). Therefore, a home owner is actually more likely to have a higher cost of capital over all - both the deposit and the mortgage added together, even if the mortgage interest by itself may be lower than renting.
Think of it this way - if renting was more expensive than the total cost of ownership, then an investor would borrow the capital needed for buying, and then rent it out and arbitrage the difference risk free. It is this mechanism that keeps the rent and the price of ownership at approx. equal.
In recent times, the price of ownership has grown due to the pandemic, and high availability of credit. Rent will follow, if it hasn't already, as landlords will not just eat the loss.
Which is not that far from the truth. At least on the UK, rent is an extortionary and ever-increasing tax on people who don’t have 150K to pay a deposit.
Why?
I mean that as a serious question. Housing costs in the US are absurdly front-loaded compared to renting, but they didn't used to be and there are other countries where they aren't. Why "should" housing be so expensive that six months or a year or careful saving on a living wage isn't enough for a down payment?
Nice bald assertion. It doesn't make sense to trap people in dependency, but I take it you're more comfortable with these programs failing in that direction...?
> this creates a perverse incentive
Which we already have, just with the reverse valence.
This is why I said I support means-testing the mortgage-interest deduction. People don't really understand things until they've been through them, and there's no good reason wealthier people shouldn't have to put up with similar paternalist nonsense for their handout.
Because the next step from subsidized housing is to renting.
If we structured subsidizing housing programs such that they enabled people to save up for down payments, this creates a perverse incentive for normal renters to get into subsidized housing to accelerate their transition to home ownership. Any time you introduce a perverse incentive like this, you overwhelm the system as people who don’t need it start crowding out people who actually do need it.
Going straight from subsidized rental housing to home ownership doesn’t make sense. Going from subsidized rentals to non-subsidized rentals is the obvious next step.