I wouldl continue to rent. The main driver on that decision is the type of property you are looking for. Townhomes in Poway/PQ/RB etc still have the propensity to take a big drop. The same is true for the single family house type you are looking for. If you sign another lease for a year or two you will do pretty darn well in the future. My caviot is this…

SAVE MONEY.

If indeed the interest rate environment is radically different in 2009-2010 then you WILL need downpayment money no matter how far prices go down. This is something frequently not discussed here. Especially if lending standards are going to change which I really think/hope/believe they will.