I would take a few issues with that claim. The average price of a home is a function with a lot of inputs, supply and demand chiefly among them. We see issues with both, but the demand is surely the largest issue: as single-family homes are seen increasingly as investments to be collected rather than basic human necessities, the price shifts from the "average" income to the income of corporations or moneyed individuals, and they consume a huge number of these homes. That creates a supply issue for real people.

Real wages have been stagnant for a long time. The average person is not likely to be borrowing more than they were able to in 1985 adjusted for inflation and assuming the same loan terms. While real wages have stayed stagnant, all homes sold today will cost their new owners ~43% more of their individual purchasing power than the same homes would in 1985.

I think this applies more on the way up when interest is decreased. When interest go up, home owners may not afford to sell at a lost as they could have borrowed more, so you hold on to it. So I imagine house prices raise much faster than they decrease with interest changes.

And taxes were substantially lower in terms of inflation-adjusted dollars.

It actually is not!