Better investment to buy a home to live in OR put my money in the market?

[Jesse Gaynor]

Hi guys! I can afford a 700K home with 25% down on a 6.5% interest rate. I'm comparing this to investing in an ETF fund, which in the long term averages out to 10% returns per year.

25% down plus all all the closing costs and various expenses could be more than 200K. Given that real estate, in the long term, increases in value on average 4% per year, does purchasing a home make sense?

Things to consider-

-I pay $2,500 rent now.

-Although a home appreciates at 4%, it's 4% of 700K, whereas i'm only earning money on 200K with an ETF stock. 

-I will have more various home expenses in the long term that I would never need to pay if i stayed a renter.

At first glance, my thoughts are i'm not paying $2,500 / month in rent so of course buying a home is a better investment. However, upon further consideration i'm not clear which is a better investment.