If you're buying a home... You can't time the bottom; you can pick a great house
Money Magazine offers this advice for today's Buyer: Resist trying to time the market, this is the best buyers have had it in two decades, inventories are up and mortgage rates are low. Find the right place and drive a hard bargain. With this said, in the Charlotte, NC market some neighborhoods have homes selling in hours or days after they come on the market, so make your offer appropriate for the market conditions you are dealing with. A low offer in a hot neighborhood with low inventory won't fly, however a low offer in a neighborhood with high inventory and homes that have been sitting on the market for months is a go. Start your bidding at 10% below what comparable homes are selling for. And if you are trading up, your home could sit on the market as well so sell before you buy.
Homes are plentiful and will remain so, but getting financing will become more expensive. In spite of the fact that the Fed has slashed interest rates, fixed rates don't directly follow, they follow the bond market's expectation about inflation, which remains a concern. There is speculation that interest rates will rise to the mid 6% range by December of this year and into the 7% range by 2009. This means that there could be a penalty for waiting to buy even if prices fall more.
Don't buy cheap; buy good schools. By now you've probably heard from somebody who knows somebody who got a great deal on a foreclosed property. But when you buy a house you are also buying into a neighborhood. Foreclosures tend to be bunched in areas where residents and speculators alike took out exotic mortgages to get into homes they couldn't afford. Price and quality could both decline further.
Similarly, avoid developments that popped up in the past few years. They too likely have a lot of owners with risky loans and little equity. Instead go to areas with highly rated schools. They generally fare better during downturns and that pattern is holding today.