Yeah, you're right -- I have seen some *amazing* deals on homes in my area. Two years ago, you could hardly find any homes at all for less than $100k in my area, regardless of the condition of the home. Now, there are at least hundreds, and probably thousands. Lotsa supply, and most people are too poor and/or paranoid to generate any demand. I'm sure my own home has dropped in value as a consequence. (But that's okay, because that'll mean lower property taxes in a couple of years.) If I was selling, I'd be pretty bummed out. But for buyers, well, this is their market...if they can get credit, or have the cash. I could actually buy a second home, if I put it on credit, but I'm not putting anything on credit that I can't pay off entirely when the bill arrives. (Because I'm paranoid too.)
Some people have had perfect timing on this housing mess. I have a friend who went to California to work in the video game industry, and he was renting a house for a while near San Diego. The guy who owned the house had paid $350k for it about ten years ago, and he sold it two years ago for $850k, so he made about $60k/year profit on that one investment. My home is valued around $250k, and it's got one bedroom less than that house that sold for $850k in CA, but otherwise, quite comparable. And my home has waaaay better location, pretty much anything and everything within walking distance, including one of the nicest urban parks in the country. That $850k house was way out in the sticks, 25 miles from civilization.
That's when I started getting paranoid about the markets, seeing that massive rise in home prices in CA compared to a similar house in the Midwest going for less than a third of that, despite the better location. I started saying to myself, what goes up eventually comes down, and what goes up THAT much probably comes *crashing* down. That was the year (2006) that I installed my garden and food-bearing trees, and started eliminating debt from my life, because I had an unshakable feeling that some kind of shit was about to hit the fan.