While the market has declined, it has declined less (or not at all) in the most desirable neighborhoods, and the most in lower income areas.
I looked at homes this week under $400k, in East San Jose, and everyone needed work. But, if you have the cash, resources and foresight, these are a great investment. But if you also want good schools, etc, you would be lucky to purchase a condo in that area for that price.
Investors are out snagging up the good properties. It is time to come out and get in the market. But you have to educate yourself. Look at homes out there and see what your money will buy for you.
Happy house hunting!