As Maureen prefaced, we do not have a crystal ball, and it is very difficult to time the, "perfect buy." In our area, the economic downturn started long before it did in the rest of the country, and many predict we will come out of it sooner, as well. See, there is a silver lining to -3 weather :-). That being said, values are VERY attractive, rates are even MORE attractive, so what is there to wait for?? IF you are or may be moving inside of 2 years, I would recommend you Lease, especially now. IF you feel you will be around for more than a couple years, look VERY closely at purchasing.
I practice what I preach and just turned my previous primary residence into a rental and upgraded. It is times like this that create wealth ... or at least can create security. You don't make money when you sell ... you make money when you buy.
Feel free to contact me to discuss this, the concessions you asked about on foreclosures, or exploring your options as relates to FHA.
Enjoy your sunny, Monday!