You're incorrect. Inflation numbers do account for substitution effects (ie. People buying a cheaper replacement good). Something no one buys that goes up in price 100x has no substantial effect on inflation, while food that everyone buys going up 10% goes straight into it. Depends on the agency doing the stats and calculations, but it's probably in the ballpark.
Adjusted, people have more purchasing power today, even if they are spending relatively more on housing.
High house prices suck, and definitely are a big problem, arguably self-bflicted in most places by increasingly onerous regulations (zoning, building quality, minimum sizes, and so on). Certainly there are some benefits to that, but all comes at the cost of increased house prices.
The other thing is labour has become relatively very expensive compared to most goods today, and houses embed a huge labour cost component - so their price (along with other labour-intensive sectors like, well, education and healthcare), have gone up much more than eg. Food, which can be produced largely with capital investment (tractors and so on)
Adjusted, people have more purchasing power today, even if they are spending relatively more on housing.
High house prices suck, and definitely are a big problem, arguably self-bflicted in most places by increasingly onerous regulations (zoning, building quality, minimum sizes, and so on). Certainly there are some benefits to that, but all comes at the cost of increased house prices.
The other thing is labour has become relatively very expensive compared to most goods today, and houses embed a huge labour cost component - so their price (along with other labour-intensive sectors like, well, education and healthcare), have gone up much more than eg. Food, which can be produced largely with capital investment (tractors and so on)