Single engineers and DINKs in the SF area should be buying if they're expecting to stay any real length of time. Price corrections when the housing market collapsed may not have helped SF like it did in other areas of the country but mortgage rates are dirt cheap and rent versus own pricing is at parity.
I think you're discounting the down payment factor. As a single engineer in SF, I could afford the monthly payment on a mortgage, but putting down 20% of a $1m house is beyond me and probably will be for a while (a few years).
The other trick is concern about this being the peak or close to the peak of the housing bubble in SF - so if I drop that kind of cash into a house, the market might collapse leaving me with property worth substantially less than what I'm paying.
After two years, we'd sunk $120K into our rental. Meanwhile, a friend bought a house at the same time for $1.3M and sold it just before we left for $1.6M. Even after real estate commissions, taxes, mortgage interest (which is tax deductible) and upkeep, I'm sure he came out well ahead of us.
To meet our needs (space + good schools + public transit commutes to SF) we were looking at upwards of $4K/month to rent a dilapidated shack where we'd likely have to give up our family dog to qualify as renters. And then be subject to 4-5% increases per year from the landlords.
Paying an extra $1K/month and getting both the mortgage interest deduction + property tax deduction made far more financial sense. And we actually got more choices in terms of better quality housing for our family.