Certainly there may be exceptions to the rule, but I predict 2004 prices for most area real estate, with the further danger of depreciation from there. Real Estate is not much different from stocks....speculation drives the market on the way up and on the way down. The last big market downturn (S&L crisis 1990) took 8 years in many places to work itself out - by any measure the current situation is much worse.
Not guessing, but rosy scenarios have less of a chance than do realistic ones. To clearly answer the question - this is a good time to buy IF you are not attached to a certain house and can stomach making offers of 10 to 20% below the listing prices. My opinion...of course.
It is hard to predict exactly what the market will be for the year 2008. Typically, spring time peaks with demand and therefore price and inventory. However, many are not sure what will happen in 2008. The housing market is projected to continue down. Has it hit bottom yet? Who knows. Some say yes, some say it has another 30% drop to go. As in placing money in the stock market it takes a lot of pure luck to pick the exact right moment to purchase for the best value.
Buying a home is more than a stock. It is as much an emotional decision as it is an investment in your personal future. So it is important to ask yourself if you are personally ready to buy a home? Do you want a place of your own where you can paint the walls any color you want? Are you starting a family and want to set up for a safe neighborhood for your kids to play and go to school? The financial future asks other questions. Do you have the down payment? Do you have a good credit score? Have you spoken with a lender or financial adviser to see how a house payment could work in your over all financial situation? Do you need the tax break?
If you are ready to buy a house, then my advice would be to buy as soon as you find something you love. Trying to predict the exact best time to buy will make the process so much more stressful and there is no way to guarantee you will hit the mark of "best deal".
Being an educated buyer is the first step and I assume that is why you posted the question. Find out as much as you can about the neighborhoods that you are interested in. Have a Realtor look at trends for that area. Particularly, have them look at short sale and foreclosure stats. There is a great site called ForeclosureRadar.com that you can type in an address and see up to 20 homes (if there are any) that are in some state of foreclosure.
Also look at DOM (Days On Market) and TFT (transaction fell through) to identify probable motivated sellers.
Just as you would research a stock, research the housing market you are interested in. It is also important to evaluate the decision by deciding whether or not it is a short term investment or a long term investment. Choosing neighborhoods that are transitional now, but have all the right things to make them great 5-10 years from now can offer up some bargains. A Realtor can help you identify those areas.
Good luck and Happy New Year!