There's a lot of flexibility, but there's some consensus. Don't buy more house than you reasonably need, be willing to move to another city, and if transportation savings offset the increased housing cost, then it could be worth it.
But more often than not, people who want to spend more than 3x their income end up buying more house than they need. If you live in NYC, for example, then you need a studio, or maybe 2 bedrooms if you have kids. If you can do it in one place, then you can do it in another. People might want 3+ bedrooms and a backyard in a top school district, and the pull can be really strong, but they certainly don't need those things. I wouldn't be surprised if someone who bought a house like that would be willing to make the decision to delay their financial independence at the time of purchase, but when they actually start working the extra years, would start to chafe at the loss of freedom.
Who on their deathbed regrets their housing choice? Life isn't about having a nice house. Buy something that gives you freedom of choice, and if you still want a nice house later, figure out how to get it then, when you aren't pushing the cost of the decision onto your future self.
Not necessarily (the bolded part). I know there are some places that are super expensive. And yes, if we worked really hard we could probably find jobs somewhere else. But finding two jobs (we both like working) in our two fields isn't easy.
I'd say when we bought our house, it was probably 4.5x our gross income. It was literally the bottom of the single family market in our town. 2BR, 1BA, no garage, small lot, a driveway that goes to a house in the back. The house was between our two jobs. The next town over (about 10 miles away) had 3/2's for that amount (the size of the houses really depended on when they were built. In our town, 20's to 40's, in the town over, 60's and 70's).
Of course now we both work in the next town over, so hindsight I'd have bought the 3/2 for the same amount of money.
The house isn't too big or "too much" for us with 2 kids. We could have gotten a condo, but didn't want a condo. It's just a really expensive area, where only about 5% of the people who live here can afford to own. Of course, our timing sucked, but whatever.
The other thing to consider is demographics. Yes, we live in <1200 sf now. So we could do that *anywhere*. But some towns are newer than that, and don't have 1200 sf houses. Some towns only have condos and townhouses that size, and if you want a single family home, they are all bigger. And some towns only have those size houses in crappy school districts. Which, I live in a bad school district now, and transfer our son to a slightly better, but still not great, school. But I've learned my lesson there. I won't do that again.
