That seems to be the eternal question, and it isn’t an easy one to answer given the complexity of reasons why any given person thinks about buying or not buying. But whether or not it is the best time, it certainly is a good time to buy. Interest rates are still very, very favorable. For many buyers the $8000 tax credit is still available (until April 30th unless it gets extended again). Prices have come down, and in some areas have come down a lot. And, there are short sales and foreclosures which are potentially great bargains. It’s hard to imagine a better scenario in which to buy a property.
Of course all of this assumes wanting to settle down in one place for a while; having the resources to buy without putting oneself in financial straits; being ready to take on the upkeep of a property; etc.
No one knows, of course, whether we have reached the “bottom” in the economy or the real estate market. The reality is that we won’t know we’ve reached that point until we are on the way up. Even if one thinks we haven’t bottomed out yet, there are many good reasons to buy now. Waiting for the possibility of lower prices is probably not going to gain anything. And if interest rates were to rise over the coming months, the advantage of a further drop in house prices would likely be nullified by the higher cost of mortgage money.
Finally, one's life circumstances are a very important piece of the puzzle. A house is not purely an investment. Historically, owning a house has been a wise financial investment, but it is also an investment in one’s quality of life. Too often we ignore that side of it. Depending on the reasons for buying, it is worth weighing the quality of life value against the financial investment value. Some buyers are willing to risk some of the financial value in exchange for a desired quality of life. Otherwise, I believe it is as good a time to buy now as it has ever been in my (27 years) experience.
There's a very good article in U.S. News & World Report, titled "The future of home-price appreciation." Buy Now?