Your numbers work out because you made them up. The obvious problems:
In most of the country, a $200K house going up to $400K in 10 years is very unlikely. I live in a hot market. I compared the inflation adjusted change in value over 20 years, and it's about 1-2% above inflation. It's unlikely your $200K home will be worth $300K in today's dollars.
The rate of return of the stock market is considerably higher than real estate (over, say, 20 years). So assuming the "same rate of return" is a really bad assumption! Even right before the crash in 2008, over a 20 year period, stocks did better than real estate. I wonder if there is any 30 year period where stocks did not do better!
I'm not in the "renting is better" camp. However, for most people, the leverage will not work out (it has for me, but I just got lucky).
You haven't really gained 100k. You have gained 100k multiplied by your percentage of equity, i.e. the amount you have paid so far into your mortgage principal. Assuming it's a 30-year mortgage, that will be around 30%, so around 30k.
(And of course, the house price doubling in 10 years is a bit unrealistic unless you live in a booming area.)
No, you've gained 100k. Your asset is worth $300k, your mortgage liability is $160k minus however much you've paid off; your book value is $140k (plus a bit) where before it was $40k. The bank may "own" the other 70% of your house but they don't get to increase your loan amount because it's gone up; you pocket 100% of the rise in the house's value (unless you end up defaulting on the mortgage).
You're leveraged 5x (say), so you get 5x as much growth. Just pulling numbers out of nowhere, let's imagine you buy a $200k house with 40k down; after ten years the house is worth a nominal $400k which is $300k in today's dollars. You've gained 100k on your initial 40k, whereas if you'd invested the $40k in the stock market at the same rate of return you'd only have made 20k.
You'd achieve the same thing by taking out a loan for $160k and putting it in the stock market (per the article, property and stocks grow at the same rate), but a) you can't - a bank won't lend you that much money to buy stocks, certainly not at the same low rates of interest, and b) if they did you'd be on the hook for the risk, with ordinary loans you don't have the non-recourse protection of a mortgage.
> The problem is most people don't move sideways or down... they move up, thus negating any windfall in investment prowess.
What's the connection? If you plan on buying a $600K house when you're 50 that will consume $600K, but that's true whether you rent or buy your current house.
> Renters don't always pay the taxes. There are several rentals in my neighborhood that are less than the mortgage.
It's pretty rare though, and seems like the market would generally adjust either way. Occasionally in a given market renting will be cheap enough to be worthwhile. But generally renting will be more expensive since you're competing with people who can't afford to buy.
> We could get into many ways to beat the tax system... but lets suffice to say that homeownership isn't really "beating" the tax system.
It's playing the system as intended rather than "beating" it, but the bottom line is: the government is willing to pay you $x (in tax deductions) to buy instead of renting. Tax incentives are one of the few sources of free money out there in investing: when you have the opportunity you jump at it.
> That "savings" on tax isn't savings... it is rent on top of rent... let that sink in.
What are you talking about?