So since 1988, houses seem to have risen from about 1.3 times your annual salary to at least 5 times your annual salary.

This is a big deal, so it's worth considering the causes.
In reverse order of my perception of significance:

* Big cities get more expensive, and smaller places not so much. Most people live in big cities, so that dominates the statistical effect. I imagine the price of a house in Podunk hasn't exploded upwards.
* Even in some "off peak" big cities, it's not exactly egregious: real house prices since 1987 are up 2.1%/year in Cleveland. Median real US household income is up not much less, despite the falling number of people per household.
* Zoning restrictions, in particular single family dwelling monoculture, but more generally all the Nimby-like restrictions on building anywhere near where people want to live.
* US government policy to drive housing demand, primarily through interest subsidies and running the mortgage market. The US has the most socialist housing finance system of any developed country.

Jim