Because the ratio is what makes people aim low or high. If it takes 75% to have a house, is very attractive to live in something smaller and pocket the delta for fun and games (and/or stash it away for a downpayment later in life). High wage/rent areas will only exaggerate this, since many of the luxuries in question are not coupled to local markets (gadgets, vacations, stressing away for living in a cheaper place)
If shelter is cheap, skimping there won't be worth it.
Exaggerated example: in a high wage/rent area, I'd rather have a boat than an extra bedroom. In a low wage/rent area, I'd rather have an extra bedroom than a slightly bigger TV.
If shelter is cheap, skimping there won't be worth it.