While we're talking about people buying houses they couldn't really afford

The 2 1/2 times is the mean. This would compensate for New York, San Francisco et al where if you dont want to live in a rathole you need to buy more house/apartment.
But then again prevailing wages have location factored into them. Maybe this is a rule of thumb?

Kiwi...
by definition, a "rule of thumb" is not a precise measure, because everyone's thumb is a different size.
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As far as the rule of thumb itself is concerned, its probably outdated at least for those in the upper 20% of income, because what its really about is what I assume Barbara's third point was supposed to be; the 28% rule (housing costs, including mortgage payments, insurance, and taxes, should not exceed 28% of income).
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That rule flies out the window in the upper income brackets, because there is still lots and lots of money left over after you've paid 28% of your income on housing costs. For instance, if you make 200K a year, an 800K mortgage at 6% is eminently affordable, because $5000/month housing costs is not difficult to make when your pre-tax income is over $16.6K a month (especially considering the deductions associated with housing costs.)

"My question is this: Was Boise one of those places?"
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Probably not. But as long as the mortgage companies were willing to lend the money (despite their own rules of thumb), and as long as housing prices always went up (probably true in the young home buyers' short experience; and reinforced, no doubt, by the mortgage industry eager to collect fees), why not take the plunge?

@pneogy: Well, that was exactly it. You as an individual home buyer might initially think this is crazy, but you have a real estate person telling you that you need to get in the market now, and multiple banks/mortgage companies willing to give you the money. It takes a clear-thinking person to resist, and you may not have been one of them. So there is plenty of blame to place all around. Um, including you.

@curmudgeon57: I quite agree that there was plenty of blame to go around; and blaming just the people who couldn't afford what they bought didn't seem quite fair. Just to be clear, I bought my house back in 1987, and was very careful to meet all the rules of thumb.