And what makes you think that banks won’t start to foreclose? The best explanation I’ve heard is that “The Homeowners’ Bill of Rights Makes CA a judicial state in all but name.” Look at NJ and NY — the foreclosures delayed by 2-3 years by courts are starting to enter the market. We have 2x the inventory on Homepath as this spring, a whole lot of auctions as well.
Secondly, people move. If they’re underwater and can rent the house for more than expenses, all well and good. If not, and they can’t take the extra monthly expense, short-sale, here we come, wheeeeee….. Besides, not everyone wants (or is cut out) to be a landlord.
