Owning is still better than renting ....
That all depends...
What are their arguments?
"There are great tax advantages to owning."
FALSE. It is much cheaper to rent a house in the San Francisco Bay Area than it is to own that same house, even with the deductibility of mortgage interest figured in. It is possible to rent a good house for $1800/month. That same house would cost about $700,000. Assume 6% interest, and we can see that a buyer loses at least $4,936 per month by buying. Renting is a loss of course, but buying is a much bigger loss.
Renting:
Rent: $1,800
Monthly Loss: $1,800
Buying:
Property Tax: $486 ($729 per month at 1.25% before deduction, $486 lost after deduction.)
Interest: $2,333 ($3500 per month at 6% before deduction, $2333 lost after deduction.)
Other Costs: $450 (Insurance, maintenance, long commute, etc.)
Principal loss: $1,667 (Modest 3% yearly loss on $700,000. Reality will be much worse.)
Monthly Loss: $4,936
This is a very conservative estimate of the loss from owning per month. If you include a realistic decline in house prices, as in this rent-vs-own calculator, you'll see that owning right now is a very poor choice. Here's a more optimistic calculator which ignores price changes entirely. House value losses will stop eventually, but it could take 5 or 10 years to bottom out.
Remember that buyers do not deduct interest from income tax; they deduct interest from taxable income. Interest is paid in real pre-tax dollars that buyers suffered to earn. That money is really entirely gone, even if the buyer didn't pay income tax on those dollars before spending them on mortgage interest.
Buyers do not get interest back at tax time. If a buyer gets an income tax refund, that's just because he overpaid his taxes, giving the government an interest-free loan. The rest of us are grateful.
If you don't own a house but want to live in one, your choice is to rent a house or rent money to buy a house. To rent money is to take out a loan. A mortgage is a money-rental agreement. House renters take no risk at all, but money-renting owners take on the huge risk of falling house prices, as well as all the costs of repairs, insurance, property taxes, etc. It is now much cheaper to rent the house than to rent the money.
There are large tax disadvanges to buying in California. Because of Proposition 13, it is common for new buyers to pay ten times the property tax that their neighbors pay. Tax rates are set at the time of purchase, which means those who bought long ago pay nearly nothing, and the new buyers pay all property tax for everyone else. Upgrading houses makes you a newcomer all over again.
http://patrick.net/housing/crash.html
not always
here is an example
This 2BR/2BA 1362sf condo is for sale for $1.95M on the UWS of Manhattan overlooking the Hudson River.
http://www.corcoran.com/property/listing.aspx?Region=NYC&ListingID=919576
Assuming 10% down, Total Monthly Payment of mortgage w/ maintenance and tax abatement is: $12,611 a month. those taxes WILL go up tremendously.
The EXACT same apartment is for rent in the same building for $5,450 a month
http://www.corcoran.com/property/listing.aspx?Region=NYC&ListingID=919146
So in the rent vs. buy calculation, here it costs 231% more to own than to rent. I have nt taken any tax deductions, but lets assume anyone earning enough to swing this place is getting taxed up the wazzoo.
"Owning is still better than renting ...."
I'm renting a $400,000 home for $1,300 a month. That allows me to save an additional $2,000 a month. Now I have time to look for a great deal from a seller who has to cut their price. I'll end up buying a $500,000 house for $300,000 from a desperate developer.