>assume the Fed gets its act together for 2% inflation

lol we truly have entered fantasy land, anyway

Massive hole in this logic, I see it all the time. They assume owning a home if the costs end up being more expensive, you are worse off. But its wrong.

>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

When you stop renting, you incur 100% loses and walk away with nothing but selling a home you get some of that money back.

So instead of losing 1.3 million renting, you would recover that money. Yes you are 450k less than starting but I am positive your children would prefer a 1.3m asset rather than 0.