The mess in Florida and California was caused by speculation. No different than the great Tulip bubble. They weren't buying to take advantage of the incentives. They were buying because they were betting that the trend in valuations would keep going up and they'd be able to flip the houses in short order and make a mint. In a lot of cases, they weren't even living in the homes.
The great Tulip bubble stated rationally too - then price increases started feeding on each other without regard to actual value. The same happened in Florida.