If you are a buyer, the economic stimulus package is designed to stimulate you.  You are the beneficiary of legislation that increases your borrowing capacity, coupled with rates that drop your monthly obligation.  For a buyer it's the perfect storm: historically low rates, increased loan limits for both conventional and FHA loans, a ton of choices and plenty of sellers and banks eager to receive an offer.  With the passing of the stimulus package, I am confident that we will reach the bottom of this cycle shortly.  HOWEVER, nobody will be ringing a bell to signal the bottom.  Instead, know that you are entering the housing market at a very opportunistic time.  After pre-qualifying for a loan, isolate the ideal home that best matches your "wish list" and write an offer.  Carefully arrive at the offer price by evaluating the most recent sales and escrow activity.  Avoid writing low ball offers considering that the average sales to list price ratio for the entire county is 94%.  That does not mean that as a buyer you should bring in an offer at 6% below the asking price; instead, do some diligent research with your real estate agent and take a look at the sales to list price ratio in that area and consider that the seller's asking price may be aggressive and could ultimately lure other buyers to write an offer.  There are still homes that sell for full price in today's market.  As a buyer, do not kid yourself into thinking that these historical rates will last forever.  Instead, we have all become accustomed to low rates.  Bernanke and the Federal Reserve, who just dropped the short term rate by ¾ of a percent, will definitely raise rates to avert inflation just as soon as the economy is out of the woods.  So, in the future, we can EXPECT higher rates.  As a buyer, you MUST consider how the future interest rates in comparison to current historically low rates will affect your future payments and borrowing capacity.  For example, a home at $625,000, 20% down with a 5.5% interest rate will have a monthly payment of $2,839.   If prices were to drop another 10% for the year, but rates were to increase to 6.5%, the $625,000 home would become $562,500 but the monthly payment would still be $2,844, slightly higher.  If rates were to increase to 8%, the same rate as in 2000, the payment would then increase to $3,302, an increase of $463 per month.  If rates were to increase to 10%, the same rate as 1990, the increase in payment would be $1,110 per month!  So, looking at price as the only barometer to purchase is foolish and only a piece of the puzzle.  This IS the year to buy.  Be assured that Southern California real estate has always been a historically wonderful long term investment.