That is a misconception of buyers. Foreclosures are not cheaper than regular housing. Foreclosed property will still sell for market price. You will not be bidding alone for a foreclosed property. With multiple contracts coming in, the final price will still be the same as the non-foreclosed house next door.
Not necessarily. I think that by the beginning of 2008 we will see a redux of teh real estate market her in the Houston area we had in the late 1980's. Foreclosures were up 1000% (yes that is not a typo) and the banks were happy to dump house for whatever they could get.