Oh to have a crystal ball! The challenge with trying to buy at the bottom of any market (real estate, stock or any other commodity) it that we only know it hit bottom when the market is on its way to recovery. So the real question for a buyer is: Do I want to buy when the market is declining or recovering?
A declining market has too many sellers for the number of buyers. Sellers are more flexible on price and terms (since they are not sure where the market bottom will be), interest rates are often more favorable, and the buyer has the luxury of being able to think for a minute or two about their top choices before making a decision, often avoiding a multiple offer scenario.
A recovering market has more buyers entering every day. Sellers sense this increased demand and become less flexible on their prices and terms. The interest rates creep up (lenders are sensitive to more buyers out in the market as well), and the best properties are back to selling in multiple offers, leaving the buyer to choose between quick decision-making or losing out on the hot properties.
Although over the long term, owning real estate has been very favorable as a protection against inflation, there are core reasons that people choose to own instead of renting:
1) Protection from rental increases (with a fixed-rate mortgage, you can predict your expenses.
2) Freedom from landlord rules about pets, paint colors or how many cars you can park.
3) Freedom to improve your property to your taste.
4) Protection from being asked to leave (landlord sells the building or needs a place for a relative to live).
5) Generous tax benefits from the US government to encourage property ownership.
The savvy buyers know that a declining market is their best chance for a great value, but for the 5 reasons listed many buyers don't always want to wait...