I.

Alice is considering buying a house.

Alice lives in Littleton, Colorado. While she hasn’t decided whether she will buy or rent, she knows she wants a house, not an apartment or condo. In a stroke of great fortune, she finds two eerily identical but beautiful houses on the same block. The only difference: one is for sale, and one is available for rent.

While Alice is an incredible, unique person, her housing desires are exactly average. As such, she’s relieved to learn that both houses are exactly at the median price point. The house for sale costs $703,000 — the exact median house price in Littleton — and the house for rent costs $2,950 a month — the exact median rent price for a house in Littleton.

She loves both houses. The only question: is it financially smarter to buy or rent?

Alice assumes she should buy, since she is the target demographic for getting a mortgage. She’s diligently worked a steady job for 10 years, gotten promoted, and accumulated a healthy pile of money into a savings account. Not an extravagant pile; she can’t all-cash-offer a new house. But enough for a responsible 20% down payment. She’s married and just gave birth to her darling child, Alice Jr. They’ll live wherever they move for the next 18 years, until Alice Jr. goes to college.

Even though Alice is the target demographic for buying a house, she tells her partner: we should do the math to be sure that it makes sense financially.

And by do the math, she means use the NY Times calculator for deciding to rent or buy. She plugs in the numbers: $703K total cost, 20% down payment, 30 year fixed rate mortgage at 7%, live there for 18 years, assume the stock market returns 7% annually, and assume the Fed gets its act together for 2% inflation.

With those fixed, Alice notices wow, changes in housing prices make a huge difference. (For simplicity, assume home prices and rent rise or fall together, at the same rate.) A few scenarios:

1. Housing prices rise dramatically. President John Nimbyism wins in a landslide and decrees no new homes can be built, leading housing prices to rise 6% annually. After 18 years, the price of Alice’s house nearly triples. The whole process of buying (and at the end, selling) the house costs Alice ~$1.1M. By buying instead of renting, Alice saves $600K. Thanks to the money saved, Alice can afford to send Alice Jr. to future-Harvard, which has jacked up tuition to $150K a semester by then.

2. Housing prices rise moderately. Housing prices rise 4%. Alice’s home value doubles, but she’s only barely better off buying. Over 18 years, renting would have cost her a few tens of thousand dollars. She’s grateful she bought, but her life wouldn’t be much different had she rented.

3. Housing prices only keep pace with inflation. America realizes it totally forgot about a few million homes it built, greatly expanding supply. Housing prices rise only 2%. Alice is much, much worse off for buying. In total, buying costs ~$1.75M, where renting would have cost her ~$1.3M. Because her finances were tied up in the house while the home value has gone up so little, Alice has minimal savings. Her daughter receives some financial aid, but takes on hundreds of thousands of student loan debt to go to college.

Thinking through these scenarios, Alice feels awkward. Before buying a house, she was worried about housing affordability. She balked at rising rents. She has friends who commute 2 hours each day because they can’t afford housing near them. She hated how expensive homes were, how unlivable her city had become.

But now, if she buys a home, she needs housing prices to keep going up to make her decision financially sound. And not just go up, but outpace inflation and — almost certainly — wage growth. Otherwise, she’s cost herself hundreds of thousands of dollars. For buying to be worth it, she needs the price of her home to double.

Alice wants to own a home. She wants to paint the walls a color she likes, to lay down new hardwood floors, to put in effort without feeling like she’s stupidly doing the landlord’s work for them. She wants a place that’s hers.

But she hates the idea that to do so, she needs to root for her home price to double. She hates that once she buys a home, she needs homes to become less affordable.

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II.

I hear advice from the older generation that “buying a house is an investment”.

On one level, I get that. Buying a house is a better way to spend money than renting, because at the end, you have something. You have a whole frigging house.

On another level, I think that the idea that home prices should outpace inflation is insane and maybe has broken modern society.

When you invest in a company, you expect the stock price to rise because the company becomes more productive. It hires employees and buys resources to develop technology, improve processes, and eventually produce more widgets, services, or addictive digital videos. The company becomes worth more because it has generated, and can generate, more.

When you invest in a home, you expect the price to rise because *s