It's a good way to think about it.
The biggest problem, IMO, is that people overestimate how much home ownership will save them. You'd better be sure about that 10k, in other words.
When maintenance rears its ugly head, and you can't call the landlord, but are paying out of pocket for that 30k sewer line burst (and that's normally your budget for the whole year), that hurts.
I certainly wouldn't pay 25x for a house in that scenario, I'd probably divide by at least the 7% stocks will hopefully return long term.
And make sure ALL costs are accounted for, and add some padding into the numbers.
So it starts like a simple way to think of it, then gets more complex as you delve into the numbers.
But it is a good, useful, basic framework. So thanks for posting. :D
(For those that mention owning gives you the fixed housing cost while rents rise, that's true, but theoretically the investments you have paying for your rents that are there because you didn't use them to buy the house will rise, and hopefully faster than inflation, so it should easily offset that.)