Schizophrenia didn't exist as a concept until the early 20th century. There were various attempts to categories and label insanity in the late 19th, but before then people were either "mad", "not mad", or "occasionally mad" - perhaps with some sense of being religiously inspired in their madness.

So it's impossible to say if schizophrenia is a modern environmental illness.

FWIW I find it hard to imagine that modern life, even in cities, is more stressful than the life of a peasant in medieval Europe - someone who would be constantly torn between instinct and the threat of eternal agony in hell, and would also be terrorised by the very real threats of war, starvation, plague, and more mundane but still deadly illnesses.

Not that modern homelessness and poverty, workplace aggression and bullying, relationship breakdowns, and the threat of physical violence aren't stressful in their own way.

If there is an environmental component I'd guess it's at least as likely to be chemical as social. But maybe there's some difference in social stress types that everyone has missed.

The concept of Demonic Possession has existed since antiquity.

They probably had some sort of mental health disorder. Schizophrenia seems to have similar symptoms.

Or epilepsy and other neurological disorders, but agreed.

Does it show schizophrenia is caused by living in the city or does it show that cities tend to have more homeless people?

It's a complex function involving social and environment stressors which effect progression, and social and cultural context which effect manifestation, and there's also feedback between manifestation and progression.

I think it's widely accepted, albeit in a somewhat loose way, that the reason "schizophrenia" was not previously attested is because society explained the behaviors differently and often in less negative terms such that there was less positive feedback that negatively effected progression and manifestation. An archetypal example would be that someone who experienced hallucinations might be understood to be highly spiritual, a mystic, or just quirky. Moreover, people lived in more tightly knit family and social groups, so someone who had trouble taking care of themselves would be more likely to live with or near compassionate family members. And if someone did become a poorly kempt recluse, that didn't by itself turn them into complete social pariahs, so they could more easily have some minimal normative social relations. OTOH, if someone just completely fell apart and died from exposure, or antagonized the wrong person and was killed, the cause wouldn't have been attributed to a mental disease, per se.

And the effect of culture goes even deeper. Hallucinations among those living in modern, western societies tend to be more paranoid and violent; more likely to involve the threat of "the government" or "they" than, say, a beneficent god or playful tree fairy. Or more specifically, as seen in many recent anti-Asian assaults, acting out racial animus received from the culture. The increased negativity in hallucinations and behaviors feeds back into progression directly (more stress from the hallucinations) and indirectly (people are more afraid and wary of you, so you more quickly become separated from supportive social networks).

Possibly a disconnect from nature does something to trigger the condition. Cities are more man-made and artificial than being close to the wilderness. I don't know if that's the correlation, but it seems like you see quite a few more paranoid and hallucination episodes from people in cities than rural areas (if we're taking out drug use).