Folsom is still rather hot. According to latest sales data, Folsom only has about 3 months of inventory. Things are squarely in the sellers court, however it takes houses not priced well a bit of time to sell.
EDH is another story. EDH has approximately 9 months of inventory and houses seem to sit here forever. We have been here for 6 months and haven't seen a whole lot of movement. There are lots of houses being taken off the market because sellers can't get what they want, and being converted to rentals. I suppose it is better to bleed slowly and face an uncertain fate than to take a bullet to the head.
EDH is overbuilt and overhyped (at least Serrano...the older parts are rather charming). There are way too many investors here looking for a quick buck. Take our landlord for instance that owns our place and one 2 doors down. Couldn't sell either of them for he price he wanted....and is now renting.
I have heard the "bay-area" theory which suggests that housing prices are being run up by transplants. Otherwise I can't explain where all the money is coming from. My personal prediction, is that yes there is some bay-area effect, but I think people got in over their heads and used fancy mortgage products to do it (like ARMs). Its easy for me to say now...but I had been saying this back in the fall before the big subprime blowout.
Summary - So for now, I think the less desirable neighborhood and overbuilt ones will suffer the most.....but soon, as financing woes come to head, it will start to take down more and more stable areas like Folsom.
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