Regarding the comment about Penasquitos Drive being the only way out, that is true only during non-emergenicies. There is a fire exit towards the north that connects with Rancho Bernardo near Camino Del Norte. They opened this during the last fire, but it took a call from my dad who was denied when trying to take PQ Drive to his house.

Also, I would say the area is OK, but there are a few questionable areas with the worst being all of the apartments/homes along Carmel Mtn Rd between PQ Drive and the church on the top of the hill. Those are mostly low income units. There is also an apartment (maybe part condo conversion now) complex at the corner of PQ Drive and Del Diablo (which intersects with Satanica, I kid you not) that I would not want to be in or by.

I grew up very close to the elementary school at the end of PQ Drive and it was a nice simple place with a great park for kids, but I think it has gone downhill a little since then. It still isn’t bad, but it’s not great either.

My advice would be to try and get a feel for the immediate neighbors is that what will really matter. Some blocks and of homes are really well kept in the neighborhood, and others are a little dinged up. I would only consider living in that area if I were to be in one of the units at the top with a view east or west. Ulitimately, as the other posters have mentioned, I think there is room for prices to fall further. No reason to jump in quite yet.