To make your argument clearer: if you buy a house and don't bring a significant amount of your own money to the deal (let's say 20 to 30% of the whole), as during the first years of the mortgage you're mostly paying interest and almost no capital, you're actually throwing your money down the drain in exactly the same way as you'd do paying a rent, BUT with the added responsibilities coming with the mortgage on one hand, and owning the house on the other hand.
Nicely stated (wish I had done a better job of it). That's basically the trap. Some people can do that and a house makes sense. People like to own.
A lot of people bought a house and fell into the trap you describe. A lot of those people didn't have good job mobility in the local area[1].
1) I would love to see a study from about 2000 to now on all the folks that defaulted and what their down payment was combined with the job outlook for their profession.
