Even without mortgage interest, owning a house outright has an opportunity cost. Since you could use that capital elsewhere instead.

>...and California home insurance stupidly low (50$/month for 1+ million house).

This is the first I've heard of stupidly cheap home insurance. I'm sitting here in Iowa paying about 8x by value. Why is it so cheap? I don't present earthquake or wildfire risk, and almost nobody has pools...which are all decent risk factors.

Because California houses aren't worth any more than Iowa houses, and you don't really need to insure land very much. All the value is the land.

And the land mostly has high values because of low property taxes combined with Prop 13, artificially low interest rates, and the difference between capital gains and income taxes.

Earthquake damage isn’t covered.

And California has relatively dry mild weather.

And we are talking about a 1.5 million dollar house in Bay Area being 1000 sqr ft with insurance rebuild cost of 300k+.

Chance of needing a rebuild are very, very, low.