Excellent question and if I had a crystal ball I would be rich. Experts didn't predict the financial mess we are in now so how can anyone predict when things will truly pick up.
The reality in home buying is this: Once prices rise, you have missed the bottom!
So with home prices and interest rates at the lowest levels in decades, now should be the time to start getting ready to make a home buy.
You have to live somewhere, why not make somewhere the home you could begin enjoying today. Rent receipts are just paper and the paying down of a mortgage is building your personal equity. And, with rent receipts you don't get the tax benefits of home ownership. It's true that home prices could continue to fall before they level off. But waiting to buy your home and get on with your life puts your family on hold.
But what if I can't sell my present home for a decent price!
It's no secret that homes are selling for up to 40% less than what they sold for several years ago. And you will have to take a hit on your present home. But the bigger home or nicer neighborhood you're looking for is also "on sale".
Example: Your $150,000 home now sells for $90,000 and that new home that 3 years ago cost $280,000, now sells for $170,000. Do the math:
Home #1: $150,000 less $90,000 = $60,000 --- Home #2: $280,000 less $170,000 = $110,000.
You lost $60K on home #1 but will get a price reduction of $110K on home #2. That's a difference of $50K in your favor!!!! And as property taxes re-adjust to new home values (communities typically compute taxes 2 years behind on home values), taxes and homeowners insurance will too.
Only you know when it it time for your family to make a move - Could the time be now?