The major flaw I see in this analysis is believing the only way to build wealth by "investing" in home-ownership is increasing property values. It completely ignores the equity one builds while paying down a mortgage. If one intends on staying put for a while (even just a couple-few years in some cases) then one can build wealth through home ownership without runaway property valuation. Money is "lost" on interest payments, but if you are leasing a home, you're paying someone else's mortgage and interest[0].
[0]: Not necessarily the case, but it works for simplicity's sake.
[0]: Not necessarily the case, but it works for simplicity's sake.