People with jobs. If we ultimately go from 5% to 15% unemployment here in CA, that means 9 of 10 folks that had a job a few years ago, still have their job. Plenty of these folks buy houses.
Also, there’s a natural “rate of household formation” that occurs over time as the population grows. This rate slows down when the economy’s bad, but it keeps on chugging. So, there’s a natural mean-reverting slightly upward sloping curve for housing demand over time.
I see nothing particularly amazing about there being buyers in the current economy, as crappy as it is. Also, housing purchases were WAY below trend during 2007 and 2008 (although they were way ABOVE trend from 2003-2006). So, there’s some catch up being played from the last couple of years, offset by lots of new foreclosure inventory hitting the market (the result of the above-trend activity between 2003 and 2006).
