I have a theory regarding markets, the worst corrections will always follow the certainty that some novel new situation that people decide is the new normal. So for example as soon as people started to accept that oil prices would rise perpetually, BOOM! there go oil prices. This can be applied both on the way up and on the way down. (The only requirement is that there actually has to be an underlying market and demand. Investing in podunk Texas real estate because people are saying it will never appreciate is just, well, dumb.)
So for example as applied to the California real estate market, the worst is yet to come. People have been warning for a long time that there is a bubble. The real danger will come (and it may be too late) when people accept the bubble as the new normal. Then BOOM, massive correction.
On the reverse side, wait until you see a cover story or two in BusinessWeek or Fortune saying that the moribund market is a permanent new fixture of the landscape. That will be the time to buy back in.
Or, I could be wrong.