Michael Pettis clarifies the difference in his post Reforming the banks.
The relevant paragraph reads:
The reason debt levels always seem to grow unsustainably, I suspect, is that in the initial stages of the growth model much if not all of the investment is economically viable as it pours into building necessary infrastructure whose profits and externalities exceed the cost of the investment. The result is real growth. At some point, however, the combination of subsidies, distorted incentives (in which investment benefits accrue to those making the investment while costs are shared broadly through the banking system), and very cheap financing costs leads inexorably to wasted investment and debt rising faster than asset values. This is when the debt burden begins to rise in an unsustainable way.
This explanation points to a difference between productive and unproductive debt that we discussed in earlier post. Productive debt creates an asset of higher value than itself. Let us highlight this sentence:
Productive debt creates an asset of higher value than the debt itself.
Please refer to the causality, critical to the equation. With housing, the sentence was correct except for the causality. The causality in housing was reverse - it was higher housing prices that were creating debt not other way round.