I don't think you can say either renting or buying is "smartest" because it depends on many factors including your lifestyle, if you're single, have kids, sources of income, willingness to move for work, etc. There are millions of people in other countries that rent and are perfectly fine. Remember, that the global financial crisis was caused by the US housing market.
I think people confuse their home as an investment because of it's supposed market value. It is actually worth nothing if you have no desire to move. Even if you want to move to make a gain, you still have the switching costs of buying a new home, real estate and legal fees and land transfer tax. Then there's the ongoing maintenance of the home that you will be paying even when you're mortgage is paid off. Renters have fewer things to worry about i.e. if the roof falls or the pipes burst they call the building manager. A home owner has the fun and joy of dealing with that themselves. The problem of having so much of your net worth tied up in your home is how to get all that equity out. That's why someone invented reverse mortgages, which are a borderline scam IMO.
You can't really compare stocks and real estate equally as investments since they are very different things. Stocks can be traded instantly virtually anywhere. Real estate is not liquid in comparison. If you look at the very long term of 25 to 30 years, the stock market actually beats the housing market even with all the massive crashes.
http://www.investopedia.com/ask/ans...-historically-stock-market-or-real-estate.asp
