With the Federal Reserve, the White House, Congress, our governor, Arnold Schwarzenegger, and the California legislature working to repair the ailing housing market, and the passing of the economic stimulus bill, a bottom to this market is on the horizon.  But, as a buyer, understand that nobody is going to ring a bell to signal the bottom of the current housing cycle, just as nobody signaled the end of the housing boom in 2005.  To wait for the bottom is foolish.  Instead, cash in on the fact that it is a buyer's market that has already erased some of the boom's appreciation.  Currently, rates are near historical lows, loan limits are increasing for both conventional and FHA loans, there is very little competition among a sea of housing choices and sellers are eager for an offer.  So, if you are a buyer, sit down with a lender and ascertain your affordability limits and payment comfort levels and then go find the home the best fits the needs of your family.  Avoid writing lowball offers and, instead, consider that the current sales to list price ratio for the county is 94%.  Rather than just take a percentage off of the asking price, research the fair market value based upon the most recent sales and current escrow activity.  There are still homes that receive multiple offers and obtain their full asking price.  Most buyers forget to consider the importance that the current historically low interest rates will undeniably NOT last forever.   Unfortunately, that is an unmistakable fact that very few consider because everybody has grown accustomed to low rates and expect them to continue.  As soon as the market starts to turn around, be completely assured that Bernanke and the Federal Reserve will continue their long term plans to thwart the risk of inflation and increase rates.  For perspective, let's compare a $600,000 mortgage at 5.5% today (soon possible with the increase in the conventional limit), $3,407, to past benchmarks.  With an 8% interest rate in 2000, the monthly payment would be $4,403, almost a $1,000 per month increase.  With a 10% interest rate in 1990, the monthly payment would be $5,265, an increase of $1,858 per month.  As a buyer, it is simply foolish to just watch prices to gauge the "perfect time to buy."  Even another 10% drop in prices will hardly make up for a change in interest rates.   With rates low and selection high, this IS the year to buy.  You can take comfort in the statistical fact that Southern California real estate has always been a historically wonderful long term investment.