Southern Calif. took a major hit from '89 to '95 mainly because of massive military downsizing. If So. Calif. were to take a hit in the near future, it will be relatively minor due to the fact there is a housing shortage.
yup,
Now we are on the upside as far as employment is concerned.(It's really only begining to turn around, the only thing slowing it is employers believing that that don't have to pay anybody anything, but that is changing) Even with modest interest rate gains, I would bet on the worst being a stagnation of prices. But I just don't see that happening yet, there are still people who want to own and supply is limited.
In my local neighborhood in the Bay Area(200 homes 800k+ price tags), there were two months without a single home for sale. We receive a couple of cards a week from realtors asking to sell our home to their ready buyer. Last week two house went up for sale and both were gone in a couple of days. I don't know the sale price but I would bet on more than the asking.