Subprime is about 10% of the market and is decidedly the low end of the market. Of that 10%, 15% might be in troule.

You wish dude! Sub prime in the last 3 years has been closer to 85% for all first time buyers.  Of that, at least 20% right now are in trouble!  Since first time buyers are what drives the market, there is gonna be a big problem.  Who is gonna buy the all the $500k entry level homes (people moving up or into those desirable ares) in SD with what money????  Especially now that the toxic loans are disappearing and when the loans reset this year, and more and more people start to realize that they owe more than their home is worth, they will start wondering why they are living off of PB&J for a lost cause and they will walk.  Its is already happening badly in the IE.  I agree that SD will handle it better.  But it is still relative, and it'll be much more than 1.5%