The $8000 tax credit for first time buyers will expire at the end of November. First time buyers are defined as people who haven't owned a home in the last 3 years. That means that there is only about three weeks to get your home under contract if you're going to close in time, and probably less as there will be a lot of pressure on all the loan underwriters toward the end of next month, though maybe they'll be given extra time like the 'cash for clunker' dealers were to complete the paperwork.
If you don't get done in this time, there is talk of extending the program. There is also talk of expanding the program to everyone, and possibly increasing the credit to $15,000. Should you wait?
Homes in the Victor Valley can still be bought for less than they cost to build. Interest rates are still low, but that isn't like to stay if the Fed keeps printing money. If we end up with 'Stagflation' of the 70's a $15,000 credit will make little difference once factored against a 12% mortgage. A $120,000 house payment would go from $720/mo to $1240/mo, so you'd be losing over $6000/year in payments.
As I've mentioned before, I still see prices trending downward. The $8000 tax credit may be erased by decreases in property prices, and a lower house payment save you the interest on the difference in price over 15-30 year loans.
I would still say it's a good time to buy, if you can get a better house than your rental for about the same monthly payment (or less). One of my clients is looking at moving up from a 875 sf duplex to a nearly 1700 sf house on .75 acre with 2 sheds, and mature landscaping with a sprinkler system for $100/month more than the rental.
It's a really good time to buy, especially if you are getting financing. If you've got cash, make a low offer and wait. If your credit and down payment need work you've got some time to get them in order before rising interest rates offset or exceed the drop in home value.
11 months ago