Did you consider scenarios with high inflation and high housing tax...
The unrealized part is the gain in property value, and your equity in it by paying down the mortgage.
But if you consider never selling the house, paying $2k/mo in rent vs $2k/mo in (mortgage + insurance + property tax) is going to start out break-even, improve as the rent climbs to $3k for the equivalent place to live, and then be a larger benefit after 30 years when that housing payment drops to just tax and insurance.
My property tax is considered “extremely high” at $4500 a year.
Rent for $4500 a year is like a closet, even in a cheap place.
Property taxes aren’t a flat rate.
Property taxes county + city are about $4300 per year. They have increased recently, and so has the rent.
If they owner put down a 10% down payment, I estimate their total monthly payment for mortgage + taxes + insurance is about $2000, and will likely remain in that ballpark.
That means rent is currently paying the entire mortage/tax/ins plus $6k per year. At the end of their mortgage that monthly cost drops to about $700, and they will own an asset likely worth $500k+.
I'm from the Netherlands, where property tax is based on the municipality. A 400K home where I live amounts to 423€ in yearly property tax. Rate increases over time are capped. And there's many ways to protest against the market value the taxation is based on.
I suppose the basis for this relatively low taxation is that a huge amount of home owners here have a relatively valuable home (even the simplest of homes is expensive) whilst having a fairly moderate to low income.
If property tax would be 10x as your example suggests, I'd suspect 75% would go bankrupt.
Making a monthly profit and ending up with a paid off, appreciated house at the end is profiting doubly.
In terms of inflation? Owning the house has already made that a lot less painful.
1. You can forgive the taxes in which case everyone else in the tax jurisdiction just pays this person's taxes indirectly.
2. You can lien the property and pass the bill on to the estate, in which case you're either having the heirs pay the taxes (and late fees, and interest) with extra steps, or if no heirs the buyer pays less for the property and the end result is basically #1.
Say retired couple owns a $500k home and can't pay $5k/yr property tax. They will live for 10 more years.
With no lien, they are forced to sell and buy a cheaper $450k house, using the equity to pay property taxes. When they die, heirs get $450k.
With the lien, in 10 years the estate sells the house and the heirs receive $450k after paying the back taxes.
Obviously this is simplifying a lot, but I don't think the rest of society is being shortchanged by the lien mechanism. Except in the case where the unpaid taxes exceeds the value of the house.