Earlier quoted context omitted.
The house price is set by what buyer's are willing to pay for them. This is taking into account that in median, 4 years of that person's work-output will be required to purchase a house.
In which country is that? Last time I checked, the common way for financing a house purchase in the entire Western world is through a mortgage loan, which makes the house price tied to the size of the loan a bank is willing to give to an average person.
When people only think short-term (what's can I afford monthly) vs. long-term (what will I pay out over the life of the loan vs. what I'm getting now) they make mistakes. These mistakes are self-inflicted but these people tend to then blame any and all others for why they can't get ahead, why the system doesn't work, why the American dream is dead :).