San Francisco Bay Area Rent vs Buy ?

Median single family home in Bay Area costs well over 700,000 dollars. San Francisco has the ignominy of being arguably the most expensive metro to live in USA. What makes more financial sense - rent or buy ? Let us look at some examples:

I know a friend of mine who rents a home for $2100 a month and a similar house in the same neighbourhood is listed for sale at $950,000. Let us analyze the costs

Rent

Total monthly cost = $2100/-

Buy

Buy price = $900,000/-
Down Payment =$180000 ( 20% )
30 year fixed rate = 6.25%
Monthly Mortgage payment Principal =$683
Monthly Mortgage payment Interest =$37503,750
Property Taxes=937.50
Sub Total ( Monthly Expenses ) = $5370.5
Tax Savings ( Assuming a 28% rate ) =1312.5
Net Total ( Sub Total - Tax Savings ) =4058
Maintenance=$150
Total Expenses of owning =$4058+$150-$683=$3525


Now Imagine, if the housing prices fall instead of staying steady.

Missing interest on $180,000 at 5% a year ? How about compound interest on the differnce between monthly cost of Buying versus Renting ?

$180,000 initial deposit + $1425 contributions everymonth at 5% interest for 1 year will leave you with 26726 extra dollars in your savings ( $9626 in interest )

It doesn't take into account the inflationary effects of Fed's monetary policies.

An after thought: I am in the inflationary camp when it comes to the future of the U.S economy. When backed against the wall, democratic governments and central bankers have always opted in favor of inflation rather than deflation. So if you can still afford to make payments and can still leave a cushion of 6 months expenses as savings in the bank, I still think buying a home would win in the long term compared to renting - even at these elevated prices.