The reason for the price declines recently (2005 on) was NOT affordability. Housing has not been affordable for quite some time now. Salaries have not/did not keep up with the 100%+ increase in prices. The declines you are seeing now (2005 on) are due to inventory, ARM re-sets, and the end of loose lending standards. As inventory continues to grow (or at least remains fairly steady during the â€œoffâ€ season), lending standards continue to tighten, ARMâ€™s continue to re-set, and lenders continue to fold, showing that these homes are not affordable now, nor were they a few years ago.
For instance: Say someone purchased a $300K home in 2005 with and ARM. It re-sets in 2007 and the borrowers now can not afford the new rate. The price of the home never changed ($300K). The home was not affordable in 2005, and it is certainly not affordable in 2007. Furthermore, the talk of government bail outs are not for new buyers, they are for people that bought years ago.
As for the question at hand, Yes. It is a good time to sell a home. You just have to price it competitively, that is, DROP THE PRICE.