> 1. A paid off home is a social safety net against homelessness for an entire family and many of their social circles. Even if all of them are unemployed, all of them have a roof over their heads.
The state provides this safety net in Germany. When both my parents were unemployed, we didn't have to move out of our apartment. The unemployment benefits were enough to pay the rent.
> 2. A paid-off home frees up cash flow. It allows the owner to divert his earnings into other activities or investments or reduce the amount he has to earn monthly.
Having to pay off a home binds cash flow at first, compared to renting.
> 3. Real estate can be borrowed against. Try that with stocks. If you are an entrepreneur, your home is likely the asset you will use to acquire bank financing for your business.
Can you borrow against a house you have not paid off yet? I think you shouldn't be able to, since the house is already a security for your mortgage. If you use your money to buy a house and then borrow to start a business, that seems horribly inefficient to me.
> 4. With unskilled / low-skilled jobs vanishing left and right, homebuilding is one of the few markets which still relies entirely on a giant low-skilled workforce. It's one of the few sectors that can keep a lot of people productively employed. I think there are valid arguments against stimulating homebuilding to reduce unemployment among low-skill workers, but there is nevertheless a societal logic here.
Houses are still being built when everyone rents, they are just large apartment complexes. In Germany, the low-skilled workers you are concerned about are mostly immigrants from poorer countries in Europe, they would move somewhere else if the housing industry stopped employing them.
> 5. In a time when wealth is centralizing as never before, investments in real estate distributes wealth locally. I think there are valid arguments against public policy to distribute wealth, but there is a societal logic here.
In Germany, the state distributes wealth directly. (see 1.)
> 6. Finally: taxing a home is very counterproductive to the well-being of the middle class and the poor. I'm sure in Germany the interest on a mortgage isn't tax deductible as you say, but I'd also guess that steps are taken to refund the property taxes for the lower classes. Otherwise you simply tax the poor out of their homes - a form of confiscation.
You are assuming the poor own their homes to begin with, this is not usually the case in Germany