In my opinion, the problem we are seeing here is that San Diego (+riverside/temecula areas) is bucking the national trend. Wasnt SD only one of 4 cities where the C-S rose instead of fell?

The OP is referencing national numbers, and in a national sense things are not great. Still something like 7-8 months of inventory coupled with increasing defaults and decreasing sales. Plus some areas (AZ,FL,NV) are far more dependent on housing related jobs than our area is.

So while the national market may still ‘need’ (I feel dirty just writing that) all the special treatment (the mods, the low interest rates, the tax credits, the subprime FHA lending, the increased GSE limits etc etc), San Diego doesnt. I dont know if anyone would consider the SD market healthy, but we are getting the steriods same as the rest of the country, even though we have a different disease.