In 2006 Japan's population will start to decline and over the next decade we will be able to see the affect this has on Japan's real estate markets. America is about a generation behind Japan in terms of birthrates and we have allowed massive immigration to make up for our lowered fertility, but the time is coming when we will see a declining population as well.
Excellent points, although I don't think our experience will necessarily parallel Japan's. Unless there's a major cultural change (or invasion), Japan is not going to have much immigration, so a lower absolute population there is a real probability.
The United States does have immigration, and we can assume that will continue. It's true that at the moment, many immigrants are Mexican and poor. However, that may not always be the case; also, a poor Mexican today may be a rich Mexican in 15 years, with hard work and frugality. Will rich Mexicans want 4,000 sqft brick boxes in the suburbs? Only time will tell ...