"Prices of houses may be high but affordability is not because of cheap financing."

A 7 fig house still costs 7 figures. In many countries you can not lock in the interest rates for 30 years but they get re-adjusted after 10 or 15 years. Could be a bad awakening for some.

"Asset prices are bounded by the cost of producing new houses"

1. "asset prices" are not only houses. But also Stocks for example

2. The most expensive thing is most of the time not the house but the land. "Buy land, they stopped making it! - Mark Twain"

Read a few books about economics dude.