Susan's right. Prices in that area haven't dropped as much, however, I recently sold a darling cottage type to a young couple who both worked at the Capitol and wanted the ability to walk to work. There were a lot on the market, and while it's true, some had older electrical and plumbing, so were also updated in those areas and really well-cared for.
The truth of the matter is that no one can say for sure what prices, interest rates or loan qualifications will do in the next year. However, after 20 years in the real estate industry, I feel confident that with good credit and/or funds to put down, most anyone can find away to get into a home.
The best thing for you to do is to start receiving emails of current homes that fit your criteria. This will keep you up to date in the kinds of properties that meet your needs and the prices they are going for. You can watch for trends this way. Then, a few months before you are ready, meeting with a reputable lender will be key---you could even do that now if you are uncertain as to your price-range.
Let me know if I can be of service and have a great weekend!