You should consider the market you live in, not the markets they talk about on TV when they say things like "negative equity" and "upside down mortgage." Read some articles about your LOCAL market. For example, the Pittsburgh area has had periods of home prices rising not falling. Also, if you put 40K down on your house it would be extrememly difficult to not have equity. The people you hear about with negative equity, etc. borrowed 103% of the sale price, put $0 down, etc.
Houses are selling when they are priced right and in good condition. FInd a real estate professional in your area and they can show you the trends in your neighborhood.
With rates under 5%, there are plenty of people out there buying, taking advantage of affordable houses at low rates. Talk to a real estate professional and a mortgage professional and see if it's the right time for you.
http://pittsburgh.bizjournals.com/pittsburgh/stories/2009/02
http://kdka.com/consumer/Pittsburgh.home.sales.2.942157.html - Sun Mar 1 2009, 08:44