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California, Florida, and a few other places are likely to see some pretty major drops. Keep your eyes on the numbers of foreclosures and that will give you a good indication of what is about to happen.
Too many people bought too much house with too little income, and they are facing increased mortgage rates with absolutely no way to pay them. They are the ones initially pushing the market down, as they sell out low trying to get out with their asses intact. At a certain point, the foreclosures will start, and that will push the market down even further.
The only saving grace is that with all these sub-prime loans, the anks are on the hook for some pretty high property valuations, which means they are less likely to firesale properties off at 70-75% of market to recoup losses, and they are on the hook for something closer to 90-95%.
It will become interesting when the banks realize that they too are underwater on these properties.
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