the real estate market is so entwined with the national economy....that in turn is affected by the global economy that it's difficult to say what is going to happen. My simplistic view is that when we get jobs, then it will turn around.
There is one school of thought that, because inventory is extremely low, prices are improving (and they are in the last few months) with historically low mortgage rates. In the theory of supply and demand, with a low supply there is upward pressure on pricing. Howver, appraisals (which are completed without influence by any parties) create a downward pressure when they must use comparable sales to determine value....it prevents the pricing from going crazy.
There is another school of thought that argues there is shadow inventory with the banks, due to the political atmosphere of picking on the banks as the bad guy. They, in their need to succeed for their stockholders, make strategic decisions on releasing properties to the market and are holding them back. In addition, no one believes the federal government can keep printing money to keep this mortgage rate low forever. Their policy is exacerbating the deficit problem. Those who argue these facts are predicting the market will drop again and go even lower.
No one has a crystal ball. Your parents need to look at their individual circumstances, the current value of their home and make that decision. However, I will encourage you that if they are considering a loan modification, or a short sale, they complete it before the end of the year to avoid tax consequences. The federal and California debt relief act are set to expire and no one is betting that it will be extended (that I know of).
And I do know that realtors would love to have your listing...there are so few. Make sure you select one who is good at negotiating to get them the best price/terms in whatever market.