As Posted in the New York Times

"Although many Southern metropolitan areas have high percentages of subprime mortgages, homeowners in those areas have largely been able to pay their bills, so subprime foreclosure rates are low.

Not so in the Rust Belt, where subprime mortgages are less common but foreclosure rates are sky-high, mostly a result of rising unemployment.

And overbuilding in regions of Florida, California and other states with housing bubbles lured overeager residents to become speculators, buying up many homes with the expectation that their values would rise. Getting subprime loans was all too easy.

But paying the loans as housing prices fall is all too hard, and many economists believe that foreclosures will continue to rise.

“The collapse will affect other markets, like New York, Boston and D.C.,” said Dean Baker, co-director of the Center for Economic and Policy Research. “Suburban areas near those cities are already seeing prices plunge.” "

I think that this article is premature and most people are hanging on by a thread.   What has happened historically is that lower income areas are hit first and the hardest.  For example, in Southern California, Riverside and San Bernardino have already felt the impact of the foreclosures and the market in general has seen a 30-45% drop in prices.  This will gradually move into Los Angeles county  and then migrate up into the higher end market. 

Property values in South Bay are near Torrance, Redondo have already seen some 15-30% drops.  The prices will continue to drop until 2010 and then remain flat until at least 2013.