The credit debacle has been unfolding with historically low rates throughout the last year. This is not so much an issue with interest rates as it is the quality of the loans given. It was a financial experiment that went gravely wrong. If interest rates fall it will help a little but not much.
This correction is occurring from the bottom up. The neighborhoods that you speak of are at the top of the food chain. The bottom of the food chain is literally being wiped out. You cannot erase the move up buyer and expect the top of the market to be immune. I will admit this is a very difficult market to read. We have never seen a housing market correction stemming from a credit bubble.
