I can’t think of any reasons why high housing prices are good for the economy, but I can think of a major reason why high housing prices are good for politicians. When prices are high people who own houses feel wealthy and prosperous, and people who feel wealthy and prosperous are likely to vote to keep the politicians in office.
Likewise all the bailouts are not really motivated by economics, but by wanting people to vote to keep the politicians in office.
Keep in mind that most politicians are fairly illiterate when it comes to economics, but pretty sharp when it comes to playing the politics game.
