Why are Bay Area housing prices still stable or rising?

The New York Times has an article today, the damn-with-faint-praise title of which is Job Losses Slow in Silicon Valley. Seems that we only lost 5% of local jobs in the past year, which is relative cause for celebration after the bloodbath of 2000 - 2003. What is staggering to me is the raw numbers. Peak employment in 2Q 2001 was 1.38 million; now it's 1.18 million, after a loss of 202,000 jobs. Average pay (meaning, I presume, wages; not income, which would have been further inflated by capital gains) was $81.7K in Y2K; it's now $62.4K. A little algegra shows that there was about $112 billion of annual salary in SV in 2000-2001; now there's about $74 billion.

For those scoring at home, that's a decline of more than a third -- 34% -- in local salary from 2000 -- 2003.

Since we are talking wage-earners here, it's not the $2 million options pads in Portola Valley that should be affected, but rather the $500K shoeboxes in Palo Alto and Mountain View. Instead, fueled by historically low interest rates, prices for homes have remained surprisingly robust during the past three years of nuclear winter -- an employment freeze that, if fear-mongering about job outsourcing overseas is true, may never actually end.

Six or nine months ago, you still regularly saw news articles about the 'housing bubble' in America, which laid out a case that people had pulled their money from the stock market and put it into real estate, taking advantage of low rates and upset at the declines in their portfolios. You don't see those articles any more, and yet prices continue to be surprisingly robust. What's going on here?

And yes, I am a frustrated wannabe-homeowner. But boy, does being in cash feel nice! Don't even get me started on the dollar and the 'which currency to be liquid in' question...