SEVERAL weeks ago, Scott Sumner wrote that population growth seemed like an important factor in determining the severity of the recent crisis. He followed this thought for a while:

Asset prices are forward-looking, thus Australian housing prices are presumably supported by not just current population growth, but also by expected future population growth.  Population growth in the US has recently slowed down.  Part of the slowdown appears to have been caused by a crackdown on illegal immigration after Bush failed to get immigration reform through Congress.  And when did this crackdown occur?  Hmmm . . . it was in 2007.  In retrospect it might not have been the optimal moment to send out a signal to property markets in the Southwest that Hispanic immigration was about to slow sharply.

I think you want to be careful about assigning too much causation to this factor, but demand is demand, and a negative shock to expected growth in housing demand from immigrants certainly wouldn't have helped matters in 2007. Here in the Washington area Prince William County, in the Virginia suburbs, adopted particularly draconian immigration-status check rules during the late stages of the bubble, and it subsequently experienced some of the largest declines in real estate values.

Along these lines, here's Richard Green:


