vit_r

The first

In 1997, inflation-adjusted house prices were close to their average levels over the previous half-century. Only four years later, the price of the average home nationwide exceeded anything ever seen before in the United States. Prices continued to rise for another five years, peaking in 2006 at nearly twice the average price in 1997 ...If house prices are heading back to the levels seen in 1997, then we are facing catastrophe.

Home Sweet Investment
via Econlog, Financial Turmoil

The second

1. The main cause of the subprime crisis was a housing bubble. This was primarily a land bubble. On p, 64:
It used to be that the underlying land typically constituted only 15% or so of the value of a home in a typical city...now that land value...is often over 50% of home value
If house prices were determined by construction costs, then you would not have a bubble, because prices would depend on supply and demand of factors of production. But when house values consist mostly of land, then the price today depends very much on the price you expect tomorrow. We have had plenty of land bubbles in the past, and we probably will in the future. Shiller displays on a graph the simultaneous land bubbles in Boston and London.

Econlog,Shiller's Rapid Response to the Subprime Crisis