I try to separate the emotional ramblings and noise from facts. Before we get distracted, we are talking about this erroneous claim "House prices will never outpace inflation over time, its impossible"
People try to misapply and misinterpret economic theories all the time and in the process get both themselves and others misinformed. Some economic theories often fail to explain or contradict certain events in society. Within the field of economics, there are various schools of thought that don't often agree with each other on an array of issues.
What is simple is this...one thing about science is that if you make claim regarding any theory, you (and others) have to be able to prove and validate it. You are not able to prove that inflation has outpaced home prices. That has not been the case in the last several decades and that is an undisputed fact. You are also not able to make a legitimate claim that inflation will outpace home prices in the long term. I don't need to get into behavioral finance and economics here.
This is also something the you are not thinking about. The federal reserve exist as a matter of statutory mandate. In executing their very job description (which you should look into by the way), prices and inflation are things they exist to influence and control. So if the government of any country sees a pattern of problem with prices and inflation, what do you think will be the goal of its monetary policy? They will do what is necessary to correct any problem and most definitely with inflation. How effective they are is a completely different story.
Not only does the data not validate your claim, in some ways for what you say to be true, that means the federal reserve would have to deliberately (through its policies) try to ensure that inflation remains higher than house prices and that would actually effectively violate their very reason for existence or stated objectives.
Again this is very simple, if you have data which shows that inflation has outpaced home prices the last 10, 20, 30 or 40 years, lets see it. You don't. So you try to discredit the data that is being used by federal agencies, the methodology that the federal agencies are using, the time frame and everything else you can think of but fail to realize you have not provided anything to verify your claim which is essential.
What are other economist saying? I am not trying to make some corny argument for home ownership as I am more for investments that generally outpace inflation significantly, especially in the long term, but these are some experts in the field that seem to think based on what they've observed that over the long run, home prices outpaces inflation. What I find looking back 10, 20, 30 or 40 years ago sort of matches what they see.
Andres Carbacho-Burgos, an economist at Moody's Analytics, said ...We expect house prices to settle into a price-growth trend that's slightly higher than inflation over the long term,” ( http://www.appraisalinstitute.org/HomeownershipPaysoffinLongRunNAR/)
Again..
"Lawrence Yun, chief economist at NAR, nominal home prices in the U.S. historically have risen 5.5 percent annually, outpacing inflation by anywhere from 1 percent to 2 percent." (http://www.appraisalinstitute.org/HomeownershipPaysoffinLongRunNAR/) .
This is also a publication from the Bank of International settlement. Scroll to page 14 where you can see the nominal and real price home price movement not just in the US but in 15 countries covering a span of 22 years. What is clear is that house prices outpace inflation in the long run not just in the US but in other developed economies around the world.
http://www.bis.org/publ/work20.pdf
Your argument is moot.
