And how are those who are not saving, affording to put down money for down payment and closing costs?

Saving for retirement doesn’t necessarily mean 401k but you can borrow from your 401k for down payment assistance so you really should be saving for your eventual retirement from day 1.

Only if you bid on the same houses. Bid on a smaller house.

Don't forget too that inflation works for you! If you save and get in a nice house early and the STAY THERE (I can't emphasize enough how important this is - sometimes life forces you to move, but avoid it), your payments measured against inflation will go down - just put that difference into a 401k (that is don't do a cash out refinance along the way as so many do) and in 30 years the house is paid off and your have a great retirement account.

When you are in the early years the above plan looks impossible, but time is your friend.