On Whidbey Island, my market place, it appears we have hit bottom. The number of pending sales are way up (45%) and the listing price to sales price ratio is at 100%. (Meaning that buyers are paying the list price on correctly priced homes.)
There've been some good discussions on this topic on Trulia Voices already. I encourage you to check out http://www.trulia.com/voices/Answer/What_does_everyone_think for some more opinions and insights.