I knew there was a housing bubble (not how badly it would burst, and not that it would come close to taking the world with it when it did) because I knew that there was no way that many people, especially those living in places like Southern California, had enough money to afford those houses. The teaser rate mortgages with expected refinancing to another teaser rate mortgage in 3 years couldn't last forever. And it didn't.
People still have no money. Incomes are stagnant, and even if the jobs situation has improved, the hangover from the Great Recession is still here. And lots of people were completely screwed by financial institutions and are unlikely to want to play that particular game again.
I'm not sure how much opening the credit spigot again will actually lure people back to buying houses, but to the extent that it does it's probably a bad idea.
