Yes, this is broadly correct. The free market will (roughly) arbitrage out any differences between owning and renting. The hidden factor is that whatever money you have in house equity represents opportunity cost that it isn't in investments. If you have 400k in a house and the stock market returns 6% over inflation, then the opportunity cost is 2k per month in interest, which is comparable to what you'd pay in rent.

There are tax advantages that favor owning (in the US), for a primary resident and not an arbitrageur - mortgage interest and capital gains when you sell are not taxed, while capital gains in a non-retirement account are.

You can gain by appreciation and leverage, of course - but you can just as easily not, you don't know if your city is going to be the next high-flying Austin or Boulder, or run-down Detroit. My own house has been flat in estimated value for four years in an area that I thought would continue to rise.

There's significant personal financial benefits to renting, too, in that many local areas are dominated by one firm or industry as a major employer, so your employment prospects can be highly correlated with the local housing market. You do not want your investments to be correlated with your employment if at all reasonable. Detroit in particular was hard hit by this in the '08 financial crisis, iirc - the automotive industry had huge layoffs and a simultaneous residential real estate market collapse, and many newly laid-off workers were underwater on their home and practically unable to sell to move for better job prospects.

The liquidity problem with homeownership as well is that it's a lump sum.

If you own $400k of stocks, you can sell any increment of dollars you want over time. You can take profit, you can take money out to cover needs, etc.

With a house, sure you can "take out home equity" but its just a loan against your home you have to eventually sell to cover or pay back.

It's like having a $400k position in your companies stock that you can only sell all at once with a 10% round trip transaction fee.

I get what you’re saying, but the housing market is actually a really subtle issue in my opinion.

Just one example, owning a home protects you against price shocks. As others have pointed out, this can sometimes be a bad thing, because when prices decrease you are also leveraged.

But it’s pretty important to a lot of middle class people that they are protected against forced relocation due to 5x housing price increases.

Of course, there’s other reasons to not own a home.

My point is that localized housing markets have all sorts of factors that are perfectly explainable by economic theory but aren’t just “Econ 101, run the supply and demand” curve.

But the same argument applies to landlords too. Why are they willingly losing money?