I suspect that this issue -- and not cheap labor -- is the primary reason why this country insists on allowing a flood of illegal immigrants to pour across the border every year. A massive population increase is the single most effective means of propping up an inflated housing market during a period of rising interest rates.
The housing bubble, if there is one, would also be caused by illegal immigration. Many of the illegals work in construction. Rush had a construction worker call in to his show and lay out some of the numbers. The cheap laborers result in a cheaper cost of construction and a cheaper house. Once this supply of cheap labor is cut back, the cost of houses will go up, people will buy fewer, the price of houses will drop, some of the value of houses will be lost.
It's just like agriculture. If the going American rate for a head of lettuce should be 2 or 3 dollars more but it is kept artificially low because of an illegal labor pool, then we are living in an artificial economy.
It is inevitable that we all wake up to sticker shock one day. Either by the illegal labor pool being restricted, or that pool realizing they have cornered a market and created a dependency and then incrementing their rates.
illegal immigrants earn enough to afford $300,000 homes?
You are partially correct. While the cost of labor and more than that the willingness on the part of illegal aliens to follow directions without questioning authority are the main issue, the housing demand is a major part of the desire by many to have illegal aliens here. They have to live somewhere and the rental property owners and those in the business of building and/or selling homes are making an absolute fortune off of this demographic group.