It's an answer to why the number is bigger but not to why the house is worth more. It is common to say "I want my house to appreciate in value" and inflation doesn't mean it's appreciating in value, it just means the number is bigger than it was before. That's not the same thing.
PP literally says “I just don't see how people go like "My house needs to sell for more than I bought it for years from now"” That is basically not understanding why people expect the number to be bigger.