Future of the Housing Market?

This NYT Mag cover story about McMansion developers is notable for this prediction about the state of housing for Gen Debt (ok, a little younger):

In the past couple of years, [home building exec Bob] Toll and his deputies have begun analyzing European housing data to see if they hold any lessons for a maturing American housing market. ..I asked Toll what our children - my kids are both under 8, I told him - would be paying when they're ready to buy. "They're going to live with us until they're 40," Toll said matter-of-factly. "And when they have their second kid, then we'll finally kick them out and make them pay for the house that we paid for. And that house will cost them 45 to 50 percent of their income."
I grew alarmed. Was he kidding? He assured me he was not...And that average, million-dollar insane home in the burbs? It's going to be $4 million."

I am writing this blog post from my 275-sq-ft! 1-bedroom in downtown Manhattan. Half the rent on this place is a third of my income (I actually pay a little less; my fiance pays more). To buy a place of a reasonable size in this neighborhood would start at 7 times our income and go up from there.