"I believe price appreciation is in store for the year 2004. Any buyer waiting to purchase a home should act quickly and make a home purchase in Silicon Valley a definite New Year's resolution," said Brian Kessler with Intero Real Estate Services in Los Gatos. "With a large inventory of home buyers and a relatively low inventory of properties on the market, we should begin to see an increase in home values in our area."

Judy Jarvis Ellis of Alain Pinel Realtors thinks 2004 may be one of the best years in real estate since the year 2000 due to motivated buyers and few homes on the market. "The classic dynamic of short supply and increased demand is already fueling fast sells and a return to multiple offers. What to do? Sell and buy, now," Ellis said.

She summed up the past year as a year of the "haves" and the "have-nots."

"Those clients whose companies survived the dot.com fallout came out stronger and wiser with discretionary money to spend. This fueled the second strongest real estate market in number of sales and appreciation since the year 2000. Those who purchased in the heyday of the 2000 market and were forced to sell this year due to job loss or sharp income decline were the ones suffering financial losses."

According to the latest statistics from DataQuick, a company that monitors real estate activity, Bay Area homes continued to sell at their fastest pace in 15 years, the result of continued demand and relatively low mortgage interest rates. Data Quick reported that indicators of market distress were still largely absent, with low foreclosure rates, stable down payment sizes and no significant shifts in the market mix.

"In addition to demand and affordable mortgage financing, owning property is seen as a good investment. There are tax advantages and also the perception is that property is a relatively safe place to be compared to other investments," said Marshall Prentice, DataQuick president.

With over 30 years of experience in the real estate market, Dennis Byron of Silver Byron Estates in Los Gatos feels passionately about the subject of real estate predictions.

"What do I think will happen in the coming year? The next year will be the end of the stagnation that has plagued the economy for the last couple of years. I don't predict this lightly," Byron said. "We follow a cycle of trends that seems to be predictable over the years and decades. We have gone through the bottom of a cycle not unlike the slowdown of the early '70s or for that matter the early '80s or early '90s."

When Byron started in real estate, he was told that homes would never go over $20,000 and that the average person would never pay 7 percent for a mortgage. But Byron recalled the 1980s when the Fed raised interest rates to 18 percent, the economy again faltered, prices became stagnant and people wondered how they could afford to buy houses.

"I have heard this cry over and over again. I was recently showing a house and the potential buyers said they were waiting for the prices to come down and the bubble to burst. Well, it won't," Byron said. "The battle cry of the pessimist today is interest rates will go up and prices will come down to make the houses affordable. They won't because we have a unique market."

Byron believes that interest may go up or down, jobs will come and go, but the demand for houses will always be there. "We have mountains to the right of us and the bay to the left of us and no more land today than we had 200 years ago. It is a simple law of supply and demand. We can only add a few thousand houses a year if we open the zoning laws and allow cities to build every square inch out," said Byron, who doesn't think that scenario would happen.

Instead, Byron predicts the end of stagnation for 2004 and that the slowdown will be over. "We will have reinvented the spirit of Silicon Valley, the entrepreneurial spirit that has been with us since Lick built the observatory," Byron said. "We will be entering the next upswing in the economy. It is predictable as rain in the winter and sun in the summer, because cycles follow cycles."

Making a resolution to buy a home is easy, but taking the steps to actually make the purchase can be difficult. John Leslie of Alain Pinel Realtors in Los Gatos gives advice for all those contemplating a move in the near future.

"To be ready to purchase, get your loan approval updated if needed. Clients wanting to trade up will love the price they will get for their homes, but will face heavy competition for the trade-up home they find," Leslie said. "For first-time buyers, I give the same advice—be ready to buy. Also, don't get discouraged. Competing for homes isn't any fun for anyone except the sellers."

For the renters who are planning to buy something this year, Leslie advises them to get their financing arranged before they go looking for a home to buy.

"Lots of prospective buyers have no idea about the process of purchasing a home. The biggest step is to sort through all the lenders and pick one who will walk them through the loan process. I always recommend two to three lenders and help match new buyers with the right lender," Leslie said.

After adding "buy a home" to the New Year's resolution list, it's a good idea for potential buyers to also add "find a Realtor" to the list to help them through the buying process.