We do need to separate housing-as-investment-vehicle from the experience of the couple in the article. Their retirement plan (own a large house, downsize to a small house) shouldn't depend on their home value appreciating faster than inflation. It should be possible to own a home outright just so you don't have a monthly payment while not banking on your house containing more wealth than you put into it.

Now, in the real world, home prices change and those changes aren't evenly distributed, so what happened to this couple is that they ended up getting priced out of a downsize (at least in the type of home they'd envisioned). But that doesn't mean that they were planning on appreciation, they were just not planning on appreciation leaving them behind.