Statewide, Karevoll and other experts said, the areas to worry about are entry-level markets, where buyers normally stretch their finances to afford a home.
Those who bought at the peak of the market using adjustable-rate mortgages are especially vulnerable to default, said Stuart Gabriel, director of the University of Southern California's Lusk Center for Real Estate. The Inland Empire in Southern California, or the Central Valley, are among the places where default activity could turn serious.
``The formula for default is no money in the house'' -- meaning no equity for the owner, ``and can't afford the new payment,'' Gabriel said.