Make sure you know what the property is worth. That is, that you wouldn't be overpaying at $250,000-$255,000. From the figures you provided, you probably wouldn't be, but some markets are very, very soft and still dropping fast. Assuming $250,000 or so is a good value, and that's as much as you can afford, then, yes, counter. And my gut instinct is that the number you're thinking of is pretty good. Heck, they only came down $5,000. You're coming up $5,000-$8,000. Just keep at it. And, though it's an old negotiating ploy, make the number you offer an odd one. Something like $242,860.
Be patient. Don't overspend. And don't pay more than you can afford. Sounds like you're heading in the right direction.
There are really only three numbers- what you can afford, what you are willing to pay, and what they will take. The bank could not care less about what you want or can afford- but they have a magic number too. What is the difference between your monthly expenses between $255k and $270k? I sure hope you are working with and talking to your agent about all this!