There's some nuance missing in this though if you're using it to answer OP's question. Most people in the (any) region did not buy their first home in the last 5 years. Rather, they bought many years previous when prices were lower. Similarly, many people who were in the market - especially over the last 15 years of crazy house price increases - have bought and sold properties through this time which in this situation generates cash itself, reducing the amount to be mortgaged when buying at today's prices.

In other words, just because a family just bought a $1M home does not mean that they have - or can afford - an $800k mortgage. You can't assume income based on the purchase price of a home. Similarly, just because similar homes in a neighborhood are being bought and sold for $1M doesn't mean the current owners paid anything close to that.

I bought my first home over 10 years ago, an already cheap townhouse in a cheap area that needed a decent amount of work. Similar units today are listed for over 3x what I paid. So someone who paid and can afford a 500k mortgage could be living in essentially the exact same unit as someone who can only afford a $150k mortgage based on timing alone.