If buying a small house is something that will make you happy, then do it. Whether it pans out to be most financially advantageous or not. There is something even more important than maximum gains...enjoying life along the way, otherwise what are you working for?
Your tone changed when describing your home (which sounds lovely), so it seems that creating a stable and controllable environment (oasis) for yourself, might be something you should lend more consideration to, again whether the numbers pan out or not. There are many options these days for earning money from your residence, which you would not have as a renter. Would you feel more excited about pursuing non-active income from real estate (while also getting your small house), or is putting money in more indexes and savings more of a motivation for you?
I personally am pursuing real estate because I decided one day that I need to both invest, and enjoy investing. Watching stocks go up and down is not fulfilling to me (it is to many people though). Towards the end of my life when I review my life and think back on my achievements, picking the most winning investment strategy wouldn't make the short list. I want stories and adventures and experiences. Therefore I am trying to find ways to invest in passive income, that is a bit more active in nature, to get more balance.
Perhaps you get this experience that I am still seeking, from your job, and are perfectly fine with the most passive form of investing. If so, lucky you. Then you can focus on earning the maximum returns as possible.
BTW my role in PF/ER forums is to provide hippie dippie alternatives. I see a need for an advocate of balance in these places that tend to encourage people to be automatic cogs worshipping at the alter of FIRE/ER, for the promise of salvation. I am atheist, so sometimes it feel a little too much like religious recompense.
In regards to you specifically, I guess what I am trying to say is that because it seems that you are well set-up, and don't have dependents (kids, at least), you are the very person that can afford to seek multiple investment options, so just do what you want and what makes you happy, as long as it continues to move you forward financially, and don't get bogged down in if you could eek out more here or there.