Because not all wealth is liquid, the future purchasing power of the money you'd get from the assets matters as well.

We've seen about 11% inflation since 2019 already, but the m1 money supply increased by about 40% during this time.

I have yet to hear anyone suggest reasons why consumer prices will not eventually catch up to that 40%. There's a big difference between it happening overnight versus happening over the course of a decade, but it still matters.

On another thread:

Presumably, houses are included in this metric. You could sell your massively overvalued house now, and realize that gain in asset prices... But then you're probably going to either be paying inflated rent or buying another property with an inflated value so it kind of ends up being a wash.