While reading an ML book, I realized that most of the time, the input data points are correlated with each other, and hence their observation is not independent. But then, why do we assume that the input data is iid?
For example, we are collecting data about house prices in a locality, the houses near to each other will have similar price for similar houses. When such data is correlated, how can we say that the data points are iid?
I possibly might have not understood something here, please let me know.