Why?

The proliferation of debt is necessary for the expansion of the money supply. A fiat based, fractional reserve system is employed in the United States of America. Under this system, there is no limit to the expansion of the money supply as long as there is an ability to issue more debt. Borrowing money entails the payment of interest on the outstanding balance owed, in addition to the repayment of the loan itself. Therefore, additional money supply is needed to create the funds necessary to make the interest payments. This additional supply is provided by the same mechanism: debt creation. Once again, there is no limiting device in a fiat based, fractional reserve system. A loss of confidence in the ability of the system to facilitate debt issuance is the endogenous variable. This loss of confidence could emerge as expectations of future earnings growth (personal income, net earnings, tax revenue, etc.) deviate from the growth rate of debt issuance. Default is born.

The housing market just happened to be the chosen arena of exploitation. The public rushed to real estate after the collapse of the internet bubble, buoyed a dovish central bank, loan securitization and the structured asset market, the expansion of niche loan markets (sub-prime, Alt-A) and Government Sponsored Enterprises, increased marketing of certain loan variations (piggy-back, pay-option, ARMs), and the liberalization of underwriting standards (no/little documentation loans).

A house is a manufactured good. It depreciates. Historically, home prices only keep up with inflation (no real return).