The old rules don't apply because the old interest rates were so very much higher.

The prices are based on the ability to repay based on the income - with lower interest rates the same income and service a much larger loan, hence the increased prices.

The world has changed, from very high rates to current very low rates, and seems like it might be changing back to middle rates.

I think that's what the mortgage lenders of today want you to believe since they have cheap cash available through the fed. As long as house prices continue to skyrocket, they could still make money on the foreclosure.