I’m a renter. I like being a renter. If nobody owned properties to rent who would I rent from?
People getting a mortgage and renting out the mortgage adds systemic risk without increasing supply, it doesn't provide any service that isn't provided otherwise.
And you're certainly misusing the term "systemic risk" here - a small-time landlord borrowing money to buy a rental does not in any sense contribute to any kind of systemic risk. They are taking on personal risk in the hope of generating a return on their investment.
Besides, the main cost in building in NYC is land prices - in the long term the builder isn't worse off by decreased land prices, and neither are renters, while people who want to buy a house are much ahead.
You could make the same point for just about everything. Starting a restaurant doesn't help anyone because you're just buying food ingredients, labor and real estate and turning that input into food and anyone can do that so you're not increasing the supply of food. Investing money in the stock market certainly doesn't help anyone since you're just buying existing securities that were already issued. The economy as a whole is full of things that aren't that important independently that you could make a convoluted argument against, even those things often add up to a functioning economy with a robust system for price discovery.