Did Bill Clinton cause the housing bubble?

The provision — part of a sprawling bill called the Taxpayer Relief Act of 1997 — exempted most home sales from capital-gains taxes. The first $500,000 in gains from any home sale was exempt from taxes for a married couple, as long as they had lived in the home for at least two of the previous five years. (For singles, the first $250,000 was exempt.)

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=105_cong_bills&docid=f:h2014enr.txt.pdf

lets put this in context.

at the time, there was no capital gains tax if you rolled the proceeds into an equally or more expensive property. part of the rationale behind the change was supposedly allowing people to downsize without paying capital gains.

not making excuses--simply pointing out that no good deed goes unpunished.

Disagree. The change created a dynamic for people to buy and, sell cash out. Rolling the proceeds into a new more expensive property is different.

so...you think that people who otherwise would not have purchased bought because of this tax break? just for primary residences?

Traded up, bought more house than they needed, bought more often, but yes. This was a factor.
Checking off Primary Residence on a loan application and not investment property doesn't make it necessarily so. The 250k/500k capital gains exclusion did contribute. Just about everyone considers it when buying and selling.