The game was invented there, but there's only 'power program' (Penn State), there's no regional conference (like the Pac-12 or SEC), a lot of the major state schools don't have programs in the FBS (New Hampshire, Vermont, Maine), and this is all while pro football remains popular in the region. So why?
It is. Yale vs Harvard is one of the oldest running rivalry in all of football. The first game was between Rutgers and Princeton. Princeton has the most titles in all of football. There just hasn't been any successful teams lately in the NE. The Pros are popular nation-wide, while college football is more visable in states lacking a pro-team, like Oregon or Alabama. It just isn't as all consuming as it is in SEC country, but its there. There is also other sports to contend with, with Hockey having more of a following than in the south or west.
For DECADES it was the hot bed, so certainly there is some recency bias. The fact that Harvard, Yale, and Princeton are all still in the top 10 for national championships recognized by the AP Poll says that right there.
But the large decline came after WW2. With so many schools getting larger, and with more resources they grew much faster and became even more competitive. So when the Ivy League had the chance they jumped down to 1-AA when the split began in the late 70's.
So the answer is almost circular, the Ivies began he sport and were the center of it for decades and decades, in the process becoming the regional conference with plenty of titles between them. But were never culturally for going all in on post season play or scholarships, so took the first exit they could.
And I would not say the NE is completely empty of power schools, Syracuse and BC both had stretches of greatness. And Princeton, Harvard, and Yale are all still int he top 10 for AP titles, with Harvard still having 28 to even Bama's just 19.