Watch out...you are about to get several million opinions!
I think that this is a good time to start exploring. I just came from Dana Point, in fact....nice day down there :).
I don't know of any SFRs in Dana Point under $400,000....but certainly there are 3 bedroom homes. There are some patio homes in that area with one attached wall that might interest you also. What I would suggest is that I can set you up with a personal website and load it with a search of homes in Dana Point under $400,000 with 3+ bd/2+ ba and then you can see what's available now. If you find something....great....if not, you can start to watch the market. Just this morning I heard someone saying that the California real estate market has seen the worst and that prices will start to creep up....
My personal opinion is that the lowest prices will be in September-October....homes that didn't sell in the summer will see price reductions. But I could be wrong...either way, this website..which is totally free..will allow you to watch the prices, if they start to move up...you can jump.
Let me know if you would like to have me send you this link?