Affluent communities, like Carmel Valley, will probably weather it the best since foreclousures are less likely.

I would not be so sure about that. The wife of an associate of mine processed loans in CV for Wells Fargo Home Loans form ~2002 through ~2005, and they were processing a much higher percentage of Alt-A stated income loans in CV than the county wide average. Her branch dealt almost exclusively with CV and in 2004-2005 2 out of 3 loans were no/low doc stated income. You can do the math on that one.