> In a functioning market rents bring in just a tiny bit more than the monthly mortgage payment, including taxes and fees.
Which means rent is still transferring money from the poor to the rich. If you have a mortgage, you're hopefully building up equity that can be released when you retire to somewhere smaller or in a cheaper location (which you can do, since you don't need to live near jobs and any kids will have moved out). If you're renting, you pay the same amount but the money that would've gone into equity instead goes to your wealthy landlord. Here in the UK, there's been a huge wave of rich buy-to-let investors buying up properties on mortgages and paying the mortgage off with rent payments.
I don't know if I agree with your parent that rent should generally cover mortgage payments, but it should at least cover mortgage interest and other expenses, plus a rate of return on top of that. You need to take into account the opportunity cost of ownership. In addition to the interest, insurance, maintenance expenses, and risk, there is an opportunity cost to the money tied up in home equity. In a functioning market, if two people start with the same amount of capital, one decides to purchase a home and the other decides to rent a comparable home and invest the difference in assets of comparable risk, they will expect to come out the same. There is a small net payment from the renter to the owner, but that is because the owner is being compensated for having their capital tied up in the home. (Or looked at another way, the renter is paying for the benefit of not having to have their own capital tied up in the home.)
It doesn't appear that way in practice, because in practice 1) the home owner generally started with more money, which is how they bought a home in the first place, and 2) ownership forces people to save money. A renter with the same income could save a comparable amount of money to an owner, but on average they don't because there isn't a mortgage payment forcing them to do so. So on average home owners tend to be wealthier than renters. But there's nothing special about ownership vs rent (besides forced savings) that causes that to be so.
Rent is not a wealth transfer from poor to rich; it is payment for a service.
Now, if house prices are depressed, like with any asset, it is possible that ownership will temporarily be a good deal. (And vice-versa.) In a situation where the market has taken a plunge, one might be able to buy in at a level where they could be cashflow positive from rent, even including un-rented periods, to an extent that over-compensates for the funds they have tied up in the house. However, in that situation, people will rationally buy investment properties, increasing demand, and returning prices to a more rational level. (Likewise if houses are overpriced, eventually people will stop buying them because they don't expect any return on the investment, which will cause prices to drop.)
If I want oil, I can go find some and drill for it anywhere that makes fiscal sense.
If I want clay, I can go find a riverbed and start digging.
If I want the corner of Fourth and Chester for commercial traffic, my options are a bit more limited.
The problem with land is not about its scarcity, its about its situational utility. The value of land is often completely out of control of the property owner themself, and you cannot create new city centers or in-demand residential neighborhoods in private enterprise.
Err, no. Building up equity is not the same as appreciation. It's basically a savings plan. This assumes that the property values remain sane and rational, not that they will constantly grow.
If the house appreciates then you get that money at sale no matter how long you've paid into it or how much equity you have.
Sure, your equity grows over time, but lets say you buy a house and live in it for 5 years. Add in the relator fees, title taxes, maintenance, property taxes and interest paid on the mortgage.
Now compare that with renting. In some situations you might be better off, but that usually requires appreciation in the value of your home. Often renting leaves you with more money in your pocket than buying does.
Which means rent is still transferring money from the poor to the rich. If you have a mortgage, you're hopefully building up equity that can be released when you retire to somewhere smaller or in a cheaper location (which you can do, since you don't need to live near jobs and any kids will have moved out). If you're renting, you pay the same amount but the money that would've gone into equity instead goes to your wealthy landlord. Here in the UK, there's been a huge wave of rich buy-to-let investors buying up properties on mortgages and paying the mortgage off with rent payments.