Vernon Smith explains why 1997

So, the question "why 1997" as far as kicking off the housing bubble, is a pretty fundamental one. And Vernon Smith, "a professor of law and economics at George Mason University [and] the 2002 Nobel Laureate in economics," believes he has the answer.

[A]t the end of the capital-gains rainbow was the right to take up to $500,000 of profit, tax free.

Thank you President Bill Clinton for your 1997 action, applauded by the banks, the realtors and all citizens in search of half-millionaire status from an investment they could understand and self deceptively believe to be low risk; thank you for fueling the mother of all housing bubbles.

Maybe somebody should get a timeline together of the various legislative and regulatory failures that fueled all this. Wikia returns nothing for "regulatory legislative failure timeline housing bubble," which is a shame, but this is a credible starting point.