Many factors led to the bubble in the 2000's housing market. Some of those factors include the high interest rates on purchasing a house. Interest rates are an extreme part of purchasing a house as they can add or take away thousands of dollars with a small change in percentage. Another factor is the government push and political push to banks to have riskier loans and lend more money. This factor pushed more money into the market, and raised prices. Overall, these two and many other factors played into the creation of the 2000's housing bubble.
The unseen affect of the loans like you mentioned made it so the value of owning a house was really not as strong.