The factors that led to the bubble in the 2000s housing market include things like open space laws, environmental laws, and historical preservation laws. People kept coming up with reasons why people could not build houses. This was not as much a nationwide thing, but it was particularly bad in California. The Federal Reserve is a contributor to the housing bust. They set the interest rate, and when it is too low, it entices people to buy a house they cannot afford.
I agree, when the interest rates are too low it lures people into buying a house they can’t really afford
When the government intervenes, it usually prevents the economy from going back to equilibrium faster. Because the government decided to lower the interest rate, it made the housing problem far worse in the long run.