Cashman: Renting rocks!
I see two serious problems with your situation, at least one of which you brought upon yourself:

(1) You are waiting for prices to drop. Now, don’t get me wrong, we do know that RE prices are dropping and will continue to drop. However, this is a very slow process! I know my clothes dryer takes close to 45 minutes, yet I don’t sit in front of it waiting for the clothes to dry! I go and do something else in the meantime. Waiting for RE cycles to bottom out is like watching plants grow. No wonder you’re desperate. When you rented, you should have planned on doing so for at least 4 years, if not longer. The fact that you haven’t unpacked completely after 2 years tells me that you naively thought that prices would correct in only 6 months. It could take 6 years my friend! (Look at the last down cycle: 1989/90 to 1996.)

(2) You are renting from a FB who can’t wait to unload the house and hence has it listed for sale at a ridiculously high price. I’ve been renting for a little over 2 years too, but my landlord is a retired gentleman who also owns his primary residence and has no intention to sell the house where I live. You have to put up with realtors and looky-loos. No wonder you are desperate! I suggest doing the following: move to a house without that problem (like mine), OR, offer the landlord to pay him extra $x per month in exchange for taking his house off the market for another year or two. Tell him that RE will boom after 2010 and that he would be a fool to sell now for $900K or $1M when he can get $2M in the next boom. (I’m half joking here, but you get my point).

Good luck, and invest your cash wisely. Do a Google search for David Swensen for ideas on diversification.