Shopping for foreclosures can offer some good deals, but they also carry risks. "I've heard plenty of stories about people ... showing up and finding the homes have been stripped of anything of value," says Zigas.

Another strategy also is pushing down prices, if you can complete a deal. Short sales are where the homeowner gets permission from the lender to sell for less than the mortgage but closer to the current value. But some in the industry say it is taking months to close on them.

On top of these market conditions is the potential for them to worsen. "The danger of being underwater arises today from price declines," Guttentag says. "That's where the risk is. I think the concern about price declines is a major deterrent."

Instead of worrying about market timing, look at your own time line. "Accept the fact that there may be some price depreciation short-term," says Guttentag. And plan to be in the home at least two to three years to give it time to bounce back.

Shopping for a refi

Lower interest rates "are helping middle-class homeowners who want to save a couple of hundred a month on the mortgage," Poorvu says.

These days, when it comes to financing, most buyers also are opting for the tried and true 30-year, fixed-rate mortgages. "It's 98 percent of the market now," says John Mechem, spokesman for the Washington, D.C.-based Mortgage Bankers Association.