Because you're (hopefully) going to come out of the other side of those 30-40 years, regardless. In one case, you can have a house you own free and clear. In the other case, you're still paying rent to someone else.
And 30-40 years is the extreme. Paying just a little extra principal every month you can have the loan paid in well under 30 years.
If you pay off your loan you are debt free in 30 years or less. However many people don't: they see their house go up in value and take out a bigger loan to spend now.
Buying a house isn't for everyone. And is harder in some areas than others. But buying something within your budget can also provide a lot of stability over time. (Which, of course, may or may not be something you care about.)
Not really, if you buy a small piece of land and make a tiny house for yourself (or find a parking space for little rent). Depending on where you are, it is possible to build one for as little as 20-30K USD, vs probably 200K USD or more for a big house. Instead of paying interest for 30 years, you could invest it somewhere else.
I am not saying getting normal houses is wrong, just that it is not for everyone. There are people who despise being in debt, in any shape or form (me included), no matter how well it is dressed up ("but you are building wealth, your house would be worth 3x in 20 years!!"). Whichever feeling is bigger (not being in debit vs living in a normal house with debt) wins, and it is different for each person.
Obviously these options aren't available in big cities like NY. There are multiple good things from this movement though - people are less in debt, people don't buy junk (or buy less) because they don't have space to put it, people likely to spend more time outdoors etc.
The concept of "tiny house" romanticizes a small budget. Poorer people get smaller houses.
In general wealth doesn't correlate with van/trailer/home size?