My personal opinion is that if you can wait to buy, you should. I have a 4 bedroom, 2 bath, pool home on my street (East Anaheim) that is bank owned and they are asking $439,000. Two years ago this home would have sold for or above $600,000.
It depends on your needs and when they need to be met. I've seen single family homes in certain parts of Anaheim well into the $300,000's.
You can track the current inventory of homes for sale by accessing my website. Or call me if you would like a personalized client MLS gateway which will give you up to date inventory activity for your specific criteria.
Robert M. van der Goes
Are you considering other areas? Take a look at the link below (Web Reference), this will take you to a post on what all areas in Orange County did between 2006-2007.
Feel free to call me with any questions at (949) 278-4807.