IF the P/E is 40 and inflation is 10%, you will break even in 17 years, not 40 years.
If P/E is 20, you break even in 12 years.
Inflation has a similar but more dramatic impact on housing because you can leverage your investment with the loan.
For future inflation. It was relatively low between 2010 and 2020 and has been reducing at a fairly fast pace recently. It’s not obvious it won’t go back to the baseline.
I am just explaining how inflation influences p/e interpretation.
Everyone has their own model of what they think inflation will be in the future, which they use to judge PE and roi.
IF the P/E is 40 and inflation is 10%, you will break even in 17 years, not 40 years.
If P/E is 20, you break even in 12 years.
Inflation has a similar but more dramatic impact on housing because you can leverage your investment with the loan.