You certainly don't have to spend very long convincing me that a significant government action can be distortive of markets, so I won't argue too much with Kevin Drum that the capital gains tax changes maybe played a contributing factor to the housing bubble (though it is hilarious that the left considers tax reductions as the only distortive government actions).
However, thinking back on events, its a little hard for me to ascribe the lion's share of the bubble to capital gains tax changes, as opposed to, say, the mortgage interest deduction or Federal Reserve interest rate policies or local zoning controls.
I probably wouldn't have bothered blogging on this, but I found the chart Drum uses from the NY Times to be hilarious:
Do you see the problem? I will help by simplifying the chart:
Its a pretty heroic assumption to say that Event B caused Trend A.
Update: Russel Roberts thinks the Times is right, but that they are using the wrong data to prove it. 1997 looks much more like the critical inflection point if you look at prices rather than sales (chart via Roberts, from a different NY Times article, click to enlarge)