To me it is quite obvious that the way we compute inflation is wrong.  Inflation needs to account for everything that happens in the economy, including the housing market. 

Can you imagine the protests we'd see in the streets if the price of gas were to go up by 35% tomorrow? would anybody be excited if any comodity's cost would swell? 

We all agree that those who buy at this time are stupid, and deserve whatever it's coming to them... but their being stupid will affect us all. 

The government created this mess with the 40 years long mortgages, 5% down payments, CMHC and almost free money... I get that they don't have any incentive to stop the craziness (the respective party will probably be banished from government for a generation , or two), but nobody else can fix this... 

Am I holding my breath? not really: we will continue to muddle along, kicking the can down the road, until some external cause will crush the housing market.