If so, they still have $1 million more to spend on rent.
Essentially what you're saying is that because someone has put money into mortgage payments instead of rent, they're better off financially, and I'm completely in agreement with you. I just don't agree that it somehow implies they're living high on the hog, so to speak; yes, they have additional options if shit hits the fan (metaphors metaphors!), in that they can cut their losses, look to sell, and move to a lower cost area and have a bit banked (and -maybe- retain their income given remote work, but also maybe not), but that's still quite a lot to expect.
The scenario in this thread was originally "the house they live in just happened to appreciate significantly and is now worth over $1mm". You're describing quite a different situation.
That owner by definition does not have a $1m mortgage - or if they do, they have quite literally cashed out.
That owner is, in fact, saving a proportion of everyone else's general housing costs, compared to new buyers and ongoing renters.
Someone with a $1m mortgage is in quite a different situation (while likely very rich in terms of net worth, does not have to be a millionaire in terms of net wealth).