Yes rent (like everything) does scale with inflation. All the absolute numbers you’re using make reasoning about this more difficult than necessary. It’s better to use percent of income, in order to get a sense for whether today’s rent is more or less expensive for the renter. That said, you gave an example from 1996 of a $220/mo avg. income and $220/mo rent, which doesn’t add up. Google tells me that as a percent of income, rent has increased over the last 30 years. You might be right; that might be in part enabled by the cost of some goods going down. But the price of food hasn’t gone down. Higher rents also might be in part changes in spending habits, so you’d need to show those haven’t changed.

I used the wrong word, btw. The word I meant to use was ‘discretionary’ income. I think that’s what you’re suggesting, that rent is discretionary? ‘Disposable’ income is what’s left after taxes, but ‘discretionary’ income is defined as being what’s left after paying for things like rent, transportation, food, and utilities (https://www.investopedia.com/terms/d/discretionaryincome.asp)

It’s true the amount one spends on rent is a bit elastic, and that is also true for most consumer goods. The problem with your argument is that rent is not optional, like most consumer goods are. There are very few things that one cannot go without paying for at all, and rent is one of those.

If I understand correctly, what you’re suggesting is the reverse of how most people including economists think of rent. This discussion does depend heavily on what “other goods” you’re actually talking about. Can you provide more concrete examples, and show that they really are getting less expensive over time? Is your hypothesis supported by Eurostat’s HICP or the World Bank’s data on inflation and consumer prices?