It totally depends on the locale. I'm buying in Madison, WI right now and the pricing is so weird. I currently rent an older, not-so-nice, flat for $1605/month.

It totally depends on the locale. I'm buying in Madison, WI right now and the pricing is so weird. I currently rent an older, not-so-nice, flat for $1605/month. Oddly enough you can get a nice 3-4 bedroom in the Madison urban area for >$350k. Assuming a 10% down payment a house for $385k (including taxes and insurance) costs the exact same amount as my flat after the mortgage interest deduction kicks in. Add to the fact that I have a fairly decent chance of recouping at least my equity and I'm paying around ~$1200/month for a much nicer place. Madison is likely an outlier as the University creates huge competition for renting, but not an inordinate amount of competition for owning. It's also not subject to arbitrage between the two markets all that much as Madison has some pretty draconian zoning policies around historic preservation that most landlords want to avoid like the plague.