The market is fickle and investing over a four year period should now be within your reach. Your price range dictates your options and makes you even consider a fixer.
It may be wise to rent first. Access work load and needs. Locate streets you want to find something within and go from there .
You have good answers posted already. I take next August as you stating 2011. What the market is like at that time will be different vs. the here and now. Although it's good to plan, it also is too far out to base decisions on solid information. The best you can do is base your thought process on what you think it will be.
Something else to think about is financing. Meaning if you are moving from out of the area (Fannie Mae/Freddie Mac will want t see new employment lined up) or if your wife will be no longer be working in order to pursue education, there would need to be sufficient enough income to qualify for the new purchase. A good loan officer would be able to talk over your situation (informally) so you know what to expect and can plan accordingly.