"No, most have bought into the notion that they need a lot more home than they really do."
While factually true, that's not a fair statement relative to the prevalence of mortgages. Yeah, if the house is a bit bigger than necessary, the mortgage will be too. But, most people who buy up buy perhaps 25% more house than they need. However, the mortgage downpayment is typically under 10%--sometimes a lot lower. So, typically over 90% of the house price is being financed.
If people bought smaller houses that they could more readily afford, their mortgages might drop by a quarter, but most of them would still have mortgages.
Congratulations for saving until you could buy. But, my comments are based on the behavior that is out there, not the behavior that would be more ideal and more thrifty.
The behavior is out there because the symbiosis of mutual greed makes bad the norm.