Soemthing else to consider. My wife and I are thinking about gettign a new house in a few years. I occasionally go online to the local real estate association website once ot twice a month. Just to see what is out there. We would like to move now but want to pay off our student loans first. I did a search for a specific town and size of house. I get 20 to 30 hits and I looked at them online. 2 were obviously repos. There has been a lot more repos in the past few months.
Our 401(k) meeting had the brokers say that you should not invest in real estate at all at this time. If you want to buy a house, go ahead, but don't "invest". They are dumping all real estate stock ASAP.
I'm waiting too. There's been a slight increase in foreclosures in LA, and I think a significant number of people are on the edge and will need to get out in a couple of years, leading to a glut of single-family homes from people who couldn't really afford them in the first place. They need to dump it, and that's where I come in...