This, from Yglesias
, may have some sense to it:
I’m fairly certain this won’t be adopted, but it does seem right to say that if we encouraged more immigration we could bolster the housing market. In essence, the price boom led to a construction boom which led to the bursting of the bubble. Fundamentally, with only so many families in the country, there’s no need for all the houses we have. The housing bust has caused a construction bust, so over time population growth will eat up the supply overhang. But that could happen more quickly if population growth was faster — i.e., more immigrants. At a minimum, if we stopped trying to drive illegals out of the country and instead put them on a path to citizenship, that would help.