Clearly there are a lot of factors to consider when thinking of real estate as an investment. One thing to keep in mind, however, is other value home ownership brings.
For instance, my wife and I lived in a basement suite until we bought our house. We had a decent landlord and really nice people living above us. The rent was a steal and the location worked out nicely for both of our commutes to work.
Then we went and had a kid. It got to the point where we just didn't want to raise our child underground anymore. We enjoy natural light too much. Plus, dealing with the generally cold temperatures and abundance of spiders often associate with basement suites became too much.
Even after running the numbers and knowing we would be better off financially if we continued to rent, we decided to purchase. The increased cost and lost investment opportunities, to us, are just the premium we pay for other things that we value. It's a fantastic feeling to unlock the door to your new home or pour over a plethora of potential colours to paint your child's bedroom. Knowing we have full control over the thermostat and other utilities in our home, not hearing neighbors walking around above us (no matter how nice they were) and being able to turn my music up as loud as I want without worrying about disturbing others are all of significant value to me.
Call me financially irresponsible. Call me an idiot. There is more to home ownership than simply dollars and cents. If you're looking at purchasing from a purely financial point of view, you might be missing out on some things. For us, buying a home was the right decision despite the costs. Your results may vary but you shouldn't discount these other reasons simply based on a balance sheet.
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