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Underlying all this is one seldom raised question: Where does personal responsibility begin? Indeed, where has common sense gone? How can the person assuming a mortgage plead ignorance or exploitation? For example, how can one commit to a six-figure obligation without paying an attorney a few bucks to explain to him what he's signing and protect his interests at the closing? The Nanny State has rendered some so helpless it borders on the imbecilic. By the way, a "bailout" means only one thing: you and I, the taxpayers, are doing the bailing! CAVEAT EMPTOR!

Land use restrictions made the cost of land rise to the point where it greatly exceeded the cost of the homes built on the land.

Absolutely. We're seeing that in spades here in the Seattle area. I'm on the upside of it (except for property taxes) because I own a house on land. But the houses around here are all now being bought by "Microsoft millionaires" because hardly anyone else can afford them.

Though I agree with much of what Dr Sowell writes, the sub-prime was much more than loans for the purchase of homes beyond the borrower’s means.
Borrowers who found themselves with credit scores inadequate to qualify for Fannie/Freddie loans were helped by sub-prime Lenders. It isn’t only bad credit that has a negative impact on credit scores. Many potential borrowers had inadequate (no enough) credit - less than 3 tradelines and no mortgage history (renters) on their credit reports. Otherwise, many of these borrowers had perfect credit - never late on the limited credit they did have.
Other potential borrowers who were shut out of the housing markets because of Fannie/Freddie rules were those with credit derogs. due to past medical expenses, divorce, death of a spouse, etc. who did not have enough time to “reestablish” their credit for acceptable credit scores. Sub-prime Lenders realized that there was a need for financing for these borrowers and it was a perfectly good reason to loan to these borrowers.
There are always “market corrections” - foreclosures, short sales, etc. in the business cycle. Recovery is much sooner if the marketplace, without government intervention, os allowed to work.

But why were housing prices going up so fast in the first place? A number of studies across the U.S. turned up the same conclusion: Government restrictions on building. A scrutiny of places where housing prices doubled, tripled, or even quadrupled within a decade shows that restrictions on building have been the key. Land use restrictions made the cost of land rise to the point where it greatly exceeded the cost of the homes built on the land. In short, government has been the principal factor preventing the "affordable housing" that politicians talk about so much.

Whoever wrote this knows nothing about real estate are the real estate market.

". . .high-risk borrowers. . ."

Like every other pundit, Dr. Sowell, otherwise a very bright man, avoids or misses the politically incorrect fact that the subprime crisis is a result of the illegal alien hordes, equal in numbers to the state of Pennsylvania or Florida, who are the prime recipients of subprime mortgages that are going into foreclosure.

"high-risk borrowers?", "poor credit risks?", "least creditworthy borrowers?"

No, it's illegal aliens and the landlords who are exploiting illegal aliens. Until everybody wakes up to that fact the charade will continue. And you taxpaying suckers will soon be bailing out the illegals and then their bankers.

The Community Reinvestment Act lets politicians pressure lenders to lend to people they might not lend to otherwise - and the same politicians are quick to cry "exploitation" when the interest charged to high-risk borrowers reflects that risk...exactly - the very politicians who a few years ago yelling "Red Lining" whenever a bank refused loans to a bunch of poor people (who do tend to live together in given areas) who couldn't repay the loans are now pontificating about the evil lenders who took advantage of all those poor people who can't repay their loans......