I live in a similar area. Everyone that I know personally (mostly younger people, a large % of the population here) rents because they all have student loan debt, their wages are crap, and they have no savings to invest in a home. They afford rent by grouping together into communal homes with 3-6 friends living together. They view the financial industry as liars and thieves and refuse to do business with them.
Some of the people I know professionally own homes. Most of them are not getting a good deal.. They are paying mortgage insurance, buying a house that is bigger than what they need, living in the burbs and getting stressed out by the commute, etc.
Some of them have so much money that even though buying a house cost them a lot and would not really be worth it in the long run, it doesn't matter for them. Its a status symbol that they can afford.
Some of the people I work with are smart about it, they probably have enough money to buy a house, but they recognize that the opportunity cost is too great, so they rent and invest, or rent and spend money on whatever their version of "hookers and blow" is.
Personally I am in the "rent and invest" category and I plan on staying there.