The last time I saw this happen was around 1984-1993.  Prices from 1984 to about 1991 or so kept rising rapidly as interest rates dropped (anyone remember 18% interest rates from the 80's that dropped miraculously down into the 8% range).  The market turned into a bubble, which eventually collapsed.  Prices took a nosedive - & rates went down to 7% and hubby & I were able to buy our first & only house. 

Then the refi thing hit in around 2003 and everyone, including me & hubs were able to refi down to a sweet 5.25 fixed rate.  That bubble took us through the 08 collapse and since then, as Robert said, the Fed has been keeping the rates down into the 3's so people were able to buy & refi.   

The same boom/bust/boom  scenario may not happen this time, as there seem to be more people with massive school loan debts.  Those would be the first time homebuyers; who are already paying a great deal of income servicing that debt.   I am no economist and, of course, am basing this solely on my own experience.