hi: Old rules of thumb: Principal, Interest and taxes should not exceed 30-35% of income. In many areas prices are back to the levels of 2000. Only time will tell if prices stabilized in 2011-12.
I am buying one myself now and do believe the timing is good. With mortgage rates at historic lows and home prices still low, I cant see a much better time to do it - particularly if you are renting and have nothing to sell. Agree with Victor - I would plan on staying 10 -15 years or more. As for ratios and what you can afford - that's idiosyncratic. Sit down with a financial advisor and/ or qualified lender to figure that part out. Best of luck!
Santa Barbara is a beautiful place. Wherever you are buying, to answer the question about whether this is a good time to buy, first, look at the comparables over the last several years to see how the pricing has behaved. As far as interest rates, this is a great time to buy, and if there can be significant tax benefits depending on your income. So the low interest rates could be enhanced by the tax benefits you might receive. While there has been some discussion of changing the mortgage interest deduction, if that happens, 2nd and 3rd homes mortgage deductions would likely be eliminated first.
It is also wise to consider whether you will be able to stay in the home long term. If your job has a likelihood of taking you to another city in the next 3 or 5 years, then you may be better off NOT buying. Remember, real estate is typically not very liquid.
Home prices have been cut in half over the past five years or so in many markets. Add to that all-time record lows for interest rates and it's a damn good time to buy. Still, that may not help you very much in making a decision on a specific home. I'd suggest you look carefully at comps in the area but take it a step further: figure out what your all-in payment's going to be (include mortgage payment, taxes and insurance - http://www.mortgagecalculator.org/ is a decent little tool for this) assuming a 30-year loan and a normal 20% down payment. Then look at what similar homes in the area are renting for. If your all-in monthly payment is less than what you could rent the house for (meaning it's 'cash flow positive') you can probably feel confident you're not overpaying. This is just one measure; obviously there are many ways to look at it and other things to consider. But doing this will help you analyse the opportunity from a investor's perspective rather than from just an emotional one as most home buyers do and clearly did a few years ago.