Go to the website http://www.chrismartenson.com and click on "The Crash Course." You should take that class and get a better grasp of the economy.
Right now, you should rent something cheap for a few years and hoard your cash for a sunnier day.
If you eliminate this "eventually wanting to purchase" urge, then your life will improve.
Keep doing what you are doing with your credit, pay off all other debts and save, save, save - 10% for the downpayment on a place way better than the townhome you are fixated on in 2008