If there is both a pool of qualified candidates that don't think the pay is high enough and thus don't apply and a pool of candidates that think the pay is so high there must be some catch and don't apply, they could both be true. You have to decide which pool to target.

At least one of those two pools exists, because if not it means there are no qualified developers looking for a job, in which case perhaps the issue is with the definition of qualified.

Also, there is the possibility they are getting great applicants that are filtered out before it reaches the individual currently here. It may be possible HR or some automated system is filtering them in such a fashion that good candidates are lost. Maybe HR is demanding 7 years experience in a 3 year old technology.

What we can reasonably assume is that the hiring manager is not finding qualified talent and qualified talent does exist. The idea that qualified candidates are only applying to FAANG or unicorns seems far less likely than something about the position is the reason they aren't getting anyone qualified.