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While not meaning to minimize the role that legislative and federal reserve actions had on the housing bubble this thread shows that beliefs also played a role in the bubble. The belief that "real estate prices always go up" was widespread and yet obviously false. Without this belief I don't think we would have had a bubble. There have been low interest rates before without a bubble. And there have been housing bubbles without there even being a FED. There was a bubble in land near railroads in the midwest (Kansas, Oklahoma, etc) that ended up in a disastrous bust.
A bubble requires not only the right legal environment but also the beliefs and actions of men.
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