Look at it this way. You will own the SD home free-and-clear in 15 years if you hold it and rent it out. Since you have positive cash flow, a tenant will be paying for the remainder of the loan for you. My guess is that 15 years from now the price of that property will be higher than today. Seems like a good position to be in.

I would rent out your existing home.
I would also rent in the OC until :
a. You are sick of the OC and want to move back
OR
b. Get accustomed to OC after a couple years and buy into a market bottom there in 2010-2011.