We made some adjustments to have the money available for such a purchase last summer but we were really disgusted with the prices that resulted from the last boom and hoped they would drop around the end of July when people realized They Weren't Selling In Time for the School Year. (ETA: Oh, yeah -- and R. figured that Julyish would result in a wave of ARM adjustments that would bring prices down.)
There _was_ some drop, but not nearly enough and then, of course, A. arrived so we're just nesting right now and monitoring the MLS listings (haven't been to an open house since she was born). And now, I read over on Housing Wire about a survey on Zillow that confirms my suspicion: people out here haven't really adjusted to the decreased value of their house yet -- which is why asking prices have been slow to drop (sales prices have adjusted downward substantially, but most of the houses that we've seen offered on the MLS just haven't moved at all).
Who wants to buy a house and watch it drop another $50-100K in value in the next year? Not me.