Inflation is extremely high: https://www.aei.org/carpe-diem/chart-of-the-day-or-century/

Looks like inflation has spiked in the last few months in the US, but that's after a long period of fairly low inflation. Compared to the past century, it's not that extreme yet; the 1970s and 1980s had higher inflation[0]. And the high house prices are not something from just the past few months, so it's really not inflation that's causing it.

My personal experience is Netherland[1] where the period of low inflation still continues, and house prices have also been shooting up for quite some time. We sold our previous house for 25% more after 8 years, and our current house has increased 25% in value after only 4 years. And even before I bought my first house, I was dismayed at the ridiculous house prices and wanted to wait until the whole thing crashed. (It did crash shortly after we bought our first house in 2008, but even that barely hurt the value of our house.)

[0] https://tradingeconomics.com/united-states/inflation-cpi (click 'max' to see the full graph) [1] https://tradingeconomics.com/netherlands/inflation-cpi

How do you take "inflation is extremely high" from that chart?

56% over 20 years is 2.25%ish per year.

How is the CPI a useful measure of inflation if it ignores the things people actually have to spend money on like housing and healthcare?

It wouldn't be, if it did that. Fortunately it doesn't ignore those. In the US CPI calculation, housing has around 42% weight, medical care around 9%. Source: https://www.bls.gov/cpi/tables/relative-importance/2020.htm

I think this is only rent? Most people don’t want to rent their whole life in the US

https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...

It uses actual rents for renters and owner-equivalent rents for owners. This does not assume at all that people want to rent their whole life. (The main assumption it relies on is that owners do not systematically understate what they think their own house could be rented for.)

So as long as the interest rates stay extremely low then this hold true?

You don't pay for the house. You pay for the mortgage. The mortgage is accounted for in the CPI and man gets this tiring. The housing component of the CPI has always been 3% for decades. It's one of the few things dragging it up to 2%.

If you have a higher interest mortgage the value of the house goes down but you still have the same monthly payment.