I was co-author for a research paper on foreclosures and short sales in the Twin Cities and their impact on sales in the MLS and I can assure you that this market is far from over. We have not yet hit the peak of foreclosures or the bottom of prices... I'm sure of that. At the same time, mortgage rates are a little higher and money is a lot harder to get. I locked in at 5 7/8 and am thrilled.
Here's how I see it: I didn't buy at the absolute bottom but I bought at a great interest rate, plan to be there 5-10 years, and I bought for about $150,000 - $200,000 less than it would cost to build it today. Will other people get better prices in the future? Probably. Will they get a better all-around deal than I did? Maybe. Am I guaranteed to be a HUGE winner on this house in the long term? Definitely.
Many buyers today have the exact same question as you do... it shows how much the mentality has changed from 2005 when it was "I better offer right now before I lose the house to someone else." Now it is "well, I better not buy now because it MIGHT be a better deal tomorrow."
It's just like any other product for sale... sometimes you get it at the best price, sometimes you just get it at a good price. Regardless, I don't think that you could say you got the house at a BAD price... but the previous buyer sure did!