It's crazy that anyone with stable income can walk into a bank and get a __30__ Year loan to buy a house, at below the cost of inflation. The only reason it's possible is because the federal government (Fannie Mae/Freddie Mac) extend an unconditional guarantee to purchase back loans at a certain interest rate as long as they "conform" with some requirements.
You can see this is true by looking up the cost of investment loans that are not subsidized - interest rates for commercial loans like this are 8-10% today and access is limited to those who have demonstrated competency in the "landlord business" over a long time... i.e., they look more like business loans than home loans.
The government subsidizes up to 10 loans per person. Idk why this was the limit (worth researching), but probably should reduce 2 active loans (allow people to move their primary residence). This would eliminate most of the subsidy and would significantly reduce the "just hold it for 10 years and get free leverage" angle of investing. At that point, people would have to pour money into interest, operate at cash-flow negative to speculate on future value, and suddenly, most would not be interested.
Get rid of 10 subsidized loans per person and the system will quickly start normalizing.
2. (Some) Tax Advantages:
Effective tax rates are lower - but not much. It looks better than it is because while much of the cash flow can be deducted, whatever cannot be deducted is taxed at marginal income levels, rather than capital gains. That literally more than doubles the tax rate for most people, washing out almost all of the interest rate/cost deduction advantage. Doing a 1031 exchange reduce deductibility of depreciation on the next property meaning the cash flow shows up there as taxable.
However, the cost-basis step up at death is crazy and should go.