Just watch the NODs and REOs in the area, once they start going down (a pattern not one or two months) that is the time to buy.
Prices are likely to have risen before NODs and REOs decline. These are lagging indicators. NODs start to decline after prices start rebounding.
But, it’s certainly not a bad idea to wait until then. You will definitely have a better chance of avoiding any depreciation.
FWIW, when we first bought in ’96 there were tons of crappy REOs. It was a great time to buy from regular sellers though because they had to compete with REO pricing, but owner-occupied houses tended to be in much better condition.
