It is because the Federal government created inflation by devaluating the dollar. As each dollar becomes worse less, it takes a bigger pile of lower valued dollars to buy fixed assets. The home may still be worth $10,000 – but since each dollar is now worth only ten cents (compared to the past), it now costs $100,000 in current dollars to buy that house.
The big climb in home prices since 2020 was due to public health demands and the Federal government response to inflate the money supply.
Also: Why does our monetary policy set a goal of 2% inflation versus say 0%? Because government policy is to encourage spending of cash – and not saving cash.
If we had deflation, then today’s cash would be worth more in the future in terms of “things” because things would cost less in the future, on average.
By maintaining an inflationary environment, the government discourages hoarding cash and encourages spending cash or investing cash.
Inflation is by design. Inflation has other benefits to the Federal government, which at the time of this writing, has $39 trillion in debt. Thanks to government mandated inflation, the government’s own debt will be paid off with cheaper future dollars.
If you are not getting this – let’s say you have $100 today. In ten years, it’s value, due to inflation, is $70. When you pay off that “$100” in the future, you are handing over $100 which by then, is worth only $70. Inflation benefits those who take on debts, and ruins those who save cash.
