I would also argue that earning equity in a home beats paying rent, even if you also pay PMI. Even the small amount earned during the initial payments. You get nothing back out of rent.
It depends. The house I live in has only gone up in price 3X over thirty years. This is a sluggish housing market. The stock market over that period has gone up WAY more than that over the same period. So a person on my block would have been wiser to have not accumulated equity – rented for less and taken the money and instead have invested it in the market.
The opposite was true if you lived in coastal California where house appreciation actually beat the stock market.
There are few ‘easy answers’ to any of this – just a lot of ‘maybes’ and ‘it depends’.