Everything old is new again…
Between 1634 and 1637, tulips became all the rage in Holland. The record of exactly what happened is sketchy and perhaps apocryphal in part, but at one point a particular kind of tulip bulb could be traded in the marketplace for about 12 acres of land. This is one reason why the history of this phenomenon is often labeled the "tulip mania."
In America between 2005 and 2008, real estate became all the rage. Remember all those infomercials, like "Anyone Can Make a Million in Real Estate with No Money down?" The real estate "bubble" had many forebears. Wall Street profits, insidious and complex mortgage products, and easy money all contributed to the problem, but the overriding reality is that everybody in America, except those at the very top or the very bottom of the economic ladder, wanted to get into the real estate game. McMansions became very popular among people who had formerly been thought of as middle-class, and suddenly many people who were certainly not "rich" started buying houses "on spec," particularly in places like Florida and Las Vegas. Builders could get easy money too, turning out those spec houses in record numbers.
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It's not unfair to call this a bubble, but I think it's more accurate to call it a mania. Always popular, real estate suddenly became the express elevator to the penthouse of the American dream—everybody tried to get on. When you look back at other "bubbles"—the Internet bubble of only a decade ago, for example—you will see that a much smaller number of individuals, and a relative handful of companies were involved. Painful as it was, it pales in comparison to the number of individuals, banks and investors around the world who were affected, often dramatically affected, by the real estate mania. Just ask anyone who used to work at Bear Stearns or Lehman. Also, the dollar amount of the losses engendered by the Internet companies is nowhere near the amount lost in American real estate. No one thought that the entire financial system was threatened by the collapse of 100 or so overpriced but very sexy cyber-startups.