There are 3 important factors that are aligned quite favorably for buyers right now.
(1) Higher inventory: in many price ranges there is more inventory of homes for sale than we've had since the early to mid 1990's. In our hottest markets, there has usually been limited inventory, lots of competition and escalating prices.
(2) Lower prices: in our local areas, prices have softened to 2004-2006 levels in many communities (but NOT ALL). Check the chart at the bottom of the page for specifics.
(3) Lower interest rates: rates are very desirable now. They were at similar levels in the early 2000's but then there was a SCARCITY of homes, prices were escalating and buyers often had to pay more than they had planned. Interest rates now continue to be low for buyers with good credit. (example from a local lender-5/5/08: 30 year conforming loans $200-$417,000 now are about 6.125% (zero points), jumbo $417,001 to $650,000 are 6.750% and super jumbo $650,000 plus are 7.625%.)

The last time there were high inventory levels, lower prices and rates in the 6%+ range was during the early 1970's!

The Bay Area Has Fared Better (outlying areas like eastern Contra Costa have not)

"The Bay Area, in general, has fared better than many other parts of California. "Other parts of the state have been hit harder by the downturn in the housing market than the Bay Area. Most of the distress is in areas that absorbed spillover activity during the 2004 and 2005 frenzy. For the most part, that's the Central Valley and inland Southern California. It still appears that a lot of Bay Area activity is just on hold, waiting for the mortgage markets to open back up," according to Marshall Prentice, president of DataQuick Information Systems, April 17, 2008, at www.dataquick.com.