The average house back then was about 1200 square feet. Those same houses are going for 2-3 times average income in my area.
The problem is that the people who can afford a 1200 square foot house are trying to buy 2500 square foot houses.
I remember watching all the HGTV shows in 2005-2006 with the twenty somethings who were “approved for $600K” and the realtor asking “Well, can you stretch your budget a little more”?