The rule of threes still applies for smart house buying. You should not buy a house of any type where the asking price more than three times your annual household income pre-tax.
That means most people whose pre-tax income is $50k - $75k should not be looking to buy anything - even a 10 x 20 ft. tiny house or RV plopped on a 100x100 sq. ft. easement lot - regardless of interest rates or local taxes if the land and "improvement" (home or trailer) is over $220k.
How many family sized homes (800 sq ft. 2 bdrm, 1 bath with garage or carport) in decent or even just livable condition out there are around that price point?
Someone's family farm inheritance where they sub-divided the bottom 20 acres into 30 parcels that flood out every February and August?
A portfolio full of "We buy any house for cash" cheap 1960s era redline home flips that had languished through probate near the highway that leads to the town dump or treatment facility?
The amount of affordable "rule of three" houses that won't require another $50 - $80k of repairs five years later is just not there.
And mostly because we Americans were told throughout the 1990's to the housing crash that our homes were investments - go ahead; take out that second or third mortgage out to - pay for your kid's free ride to grad school, add a second floor office or workout room over the garage, put in a neighborhood status symbol raised patio entertainment station with whirlpool, sauna and outdoor kitchen, or a RV for a cross country family summer vacation, or cruise to Europe or Japan!
It's not just to live in- make your house work for you to get all your fun stuff, the wanna haves.
Not a careful consideration that you saved as much as you could and save that second mortgage to pay for expensive emergencies - plumbing, HVAC, or roofing repairs, or an unexpected medical bill.
Your house as a credit card - that's the thinking that drove housing costs up.
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