The problem is many people have been priced out of home ownership. Heck, I could not afford to buy the house I live in currently if I were purchasing it today (and my neighborhood is not nearly as insane as many others in my region in terms of inflated home prices).

Because an economy based on restricting housing for imaginary value gains is totally not a local maximum trap you have fallen headfirst into.

There’s no need for deflation, at least in the long term. Just home prices that don’t increase relative to inflation.