Yes, the bay area, especially San Francisco and a few selected towns are in a micro housing market. They have always been and they will always be in that kind of market - hold it's own. Especially in the places considered a good location, where I don't know if the price will ever drop. Very basic - supply and demand. S.F. is just such a desirable place to live, coupling with great job market, housing just won't go down much in S.F.
If you wait for a couple of years, you will be paying the rent (for a house, $3000/month easily), that's $72,000 out of pocket for two years, and no tax deduction. How much will the house you are interested in buying have to drop to meet that?
Numbers can be interpreted in many years. One good example is the foreclosure rate in Marin. The headline is that foreclosure rate doubled in Marin from last year. The reality is we used to have 102 foreclosure a week, now it's 2-3 foreclosure a week. 100% but only one more house So, the effect from foreclosure will not be as much. ..
I would not wait if I can afford it. Just make sure you buy the best house your money can buy in the best location. You will also be able to put money into the house to fix or decorate it the way YOU wanted to and see the value appreciates due to both the outside influence and the efforts you have put in.