I went through this even during the lowest point in 2009. I had hoped to capitalize on the low prices and a few factors hindered it. I live in the Bay Area.
1. Banks held on to Inventory - so even if the property was vacant banks held on to them. If the property was sold it was auctioned in front of courthouses where all cash buyers swallowed them all up.
2. Short Sale Scam - unless you had a good contact/plug at a major bank, getting a short sale home was extremely difficult. Most big banks delayed short sales and many homes went into foreclosure. The banks then sold at courthouse steps to all cash buyers.
3. First Time Homebuyer Issues - having a pre approval for an FHA loan is like having a credit score of 500! So when you wrote an offer you could expect the seller to pretty much put your offer at the bottom of the pile. Cash is King, and since the Bay Area is such a desired location all my offers were not accepted because my loan was considered risky. The only way I got into a home was by buying a new condo. That way they could raise the purchase price knowing I probably had no way of getting into a house because of the factors I mentioned.
Not all people were unlucky, some got in good with Short Sales and are sitting on good equity. I made a lot on my condo (just sold it), but I had rather wanted to get into a single family home but it didnt work out.
