Just when she thought she was ready to start bidding on a home, Liss started noticing some higher prices, which she discounted as buyers listing their homes for much more than they could actually receive.

"There was one home I thought was overpriced," Liss says. "Six months before, a little bigger, nicer house in the same neighborhood sold for much less. But in a few days it sold with multiple bids."

Anita Hunter, an Alain Pinel real estate agent, says the inventory of houses has decreased at the same time more buyers are coming on the market. While inventory usually peaks in the summer, she says it was highest last May and has yet to reach a typical level for this time of year. The result is that many homes are selling quickly, often with multiple bids and for about 10 percent above asking price.

"Buyers are coming out, but the inventory isn't picking up," she says. "Anything under $2 million is selling very quickly, and now the $2 million homes are starting to pop."

With homes selling so quickly—the time between listing and sale has decreased from months to weeks, or even days in some cases—current homeowners who want to move are not willing to put their houses on the market until they are absolutely sure they have a place to live.

"If we could get some of those people on the market, that would help the problem," says Tim Evjenth, a broker with Intero Real Estate Services.

After seeing bids on another Saratoga property stack up, Liss started looking elsewhere. She placed a bid on a Los Gatos property just outside the Saratoga city limits, but so did a dozen other home seekers—one of whom outbid her and the others. She finally bought a home on Colusa Way in San Jose in March, also near the Saratoga border.

Though she paid more than 11 percent above the asking price, Liss says she is happy with the new home—there are plenty of children close to her 9-year-old son Joshua's age in the neighborhood—and would not have been able to get as much for her money in Saratoga right now.

"I could have been in Saratoga Woods last winter," she says. "Everything's just jumped."

Though any change in real estate trends can be attributed to a number of different causes, low interest rates have certainly contributed to the influx of homebuyers. Tim Evjenth, a broker with Intero Real Estate Services, says the low rates have led first-time buyers and current homeowners alike to enter the housing market.

"The stock market has been dicey at best, and people aren't able to make a lot happen there," he says. "It's better to put their money in a house."

Scott Larson, a Washington Mutual loan consultant, says the number of pre-approved loans since the last quarter of 2003 has "picked up." With so many more qualified buyers, sellers are able to be more selective when choosing one. Larson says more than ever, home shoppers need to get pre-approvals before bidding on property.

"Virtually no seller wants to take their home off the market for someone who doesn't have a loan approved," he says. "It's very frustrating for buyers right now."

Buyers not only need to have their finances in order, but be prepared to put their highest offer on the table at the beginning. Andy Mattson says he started looking for a Saratoga home in August 2003, and watched the prices climb and the bidding get more intense into 2004. He was able to find a home for his family on Trinity Way, but like Liss, offered more than the asking price.

"We bid 3 percent over asking," Mattson says. "The problem is, when you get to Saratoga, 3 percent is quite a bit of money."

Some, though, say that the current price hikes and inventory shortage is no reason for serious alarm. Coldwell Banker Realtor Jerry Houston says that, despite most homes under $1 million receiving multiple offers, the market is not nearly as frenzied as it was during the "dot-com" boom of the late 1990s. He says more homes are typically listed for sale toward the end of spring. As the number of homes rises to meet the demand created by the current economic conditions, there will be less for buyers to worry about.

"It's a good market, but it's not a crazy sellers' market," Houston says. "I'm seeing people saying, 'We're not going to get caught up in this like the stock market.' It's mellowing."

Hunter, too, says she expects more homes to be listed soon.

"I feel confident we will have more inventory in the summer," she says. "But will the prices be down? Nobody can predict that."

But in the meantime, Evjenth says anyone looking to buy in Saratoga right now needs to "be proactive" in their approach.

"If they see a listing that they like, they can't hesitate," he says. "They need to be prepared to make an offer."

Larson says it's important not to be discouraged when those offers don't pan out.

"Have a little patience," he says. "Markets tend to balance out over time. The home is always more important than the loan—you can always go back and refinance."

Fortunately, Liss says she has found a home in which she'll be happy to continue raising her son.

"One of the deciding factors was that there was an 8-year-old down the street," she says.

And for Liss, 11 percent over asking price is not too much to pay for Joshua's happiness.

Alain Pinel real estate agent Anita Hunter stands outside of a house she recently sold. Hunter said she has a large number of clients searching for homes in Saratoga, but low inventory has kept many of them from purchasing anything.