House prices: still want to buy?

I came across this article in The Economist which suggests that the price/earnings ratio for the housing market is meager and in many countries it is cheaper to rent than to buy, which goes against the conventional wisdom that it is always better to buy a house because "rent is money down the drain".

Some of you reading this (perhaps me and Jessica too?) are in the category of possible first-time home buyers who have been "priced out" of the market and forced to rent.

The article does an average over nations as a whole. But maybe we could do a calculation of our local markets and see how much we're "saving" by renting. The article mentions a couple of examples. Suppose you're in the San Francisco Bay Area, where it's possible to rent a $800,000 house for $2,000 a month. Under reasonable assumptions (mentioned in the article), a buyer would pay $120,000 more than if he had rented at the end of seven years (the average time before the typical homeowner moves).