This was a common idea, but it was largely restricted to the learned class. The idea that the gods and heroes of legend are based on real people had an early proponent in the Greek, late-fourth-century BCE writer, Euhemerus, giving his name to this approach to myth and legend: Euhemerism. Following in the footsteps of Euhemerus, scholars frequently sought to find the "real" origin of legends about the gods, trying to find likely candidates among ancient heroes.

This would not likely have been "commonly believed at the time." We can't be sure of this because our sources for belief are from people like Snorri (1179-1241), members of the learned class. These writers saw things through their own unique, literate lens. It is highly unlikely, however, that the average pre-conversion Scandinavian would have viewed powerful supernatural beings in this way. Even after conversion, this point of view would have remained with and circulated among a small group of highly-educated individuals.

If I may add on to this question, in the translation I have (I've forgotten the name of the translator) the text says "... The King learned of the journey of these Asians, who were called Æsir..." without any further explanation or footnote. Are they referring to the Trojans as Asians? Did the vikings have contact with people on the Asian continent?