Bingo! - at least that's what I see shaping up. It's certainly happened before.
When workers who were making $100,000+ start taking $25,000 jobs then they suddenly start to default on mortgages. Supply/demand dictates that the price of property goes down.
That said, I have not considered the effect of immigration. I guess there'll be lots of Mexicans and "Irish Travelers" living in those $200,000 homes!
wage deflation is not happening across the board - many professions are doing fine.