"Contrary to popular belief, our spring market starts after Super Bowl Sunday. Many people believe that it is in April or May, but that's not true in the Bay Area. We are blessed with such great weather that it starts early," said Mryt Bauer, broker/owner of Windermere Silicon Valley Properties in Mountain View.

Bauer says there is an inventory shortage this year that may be the worst she's seen in her 34-year career in real estate.

"The lack of supply is really driving a seller's market. We anticipate more homes on the market as we approach the end of the school year. However, it looks like we are still lacking the supply compared to enormous demand. I expect interest rates to go up especially with the rising oil prices. Now is a great time to buy and sell," she said.

Realtor Dennis Byron of Byron and Associates in Los Gatos says the spring market is already here and will last until June.

"It's not only the weather that will be hot. The market has been heating up all winter and will only get hotter. There are currently only 1,551 homes on the market in all of Santa Clara County. Although this will change a little in the next few months, there is a great shortage of supply and an abundance of buyers in the market trying to take advantage of the low interest rate loans," Byron said.

While things slow down in the summer, Byron doesn't expect any bargains to appear.

"We are in a trend that will last for the next few years. There are seasonal slowdowns, but the overall market is strong. The economy in the valley is getting stronger. Jobs are coming back and unless interest rates go up, I don't see any change on the horizon. My advice to buyers is, if you can get in, do it now because it isn't going to get any better," Byron said.

Byron believes there is no better investment at this time than real estate. He advises sellers to look carefully at what they want to do with the money they get out of their house. "If you are selling to invest, think refinance. If you are selling to move, make sure this is what you want to do," he said.

One of the most common questions asked of Jim Magill, a licensed broker with Village Square Realty in Los Gatos, is "What is going to happen to real estate prices?"

"In formulating an answer, I always revert back to the basics. Economics 101 states that prices are fundamentally related to the relationship between supply and demand," Magill said.

Interest rates seem to be the determining factor for both buyers and sellers. Magill is concerned about variable mortgage rates and whether salaries will keep pace with increasing interest rates.

"Interest rates are at a historic low, in the order of 5 percent to 6 percent, and rising. It is not hard to visualize interest rates trending to 7 percent to 9 percent in the relatively near future. On the one hand we have demand from buyers, but their biggest fear is that if interest rates go up by, say, 30 percent, will their salaries go up by 30 percent in the same time frame in order to maintain the same standard of living?"

Magill says the objective is not to get caught in the "cross hairs of rising interest rates" and to be able to afford the mortgage payments if income does not rise accordingly.

"On the flip side, sellers also see this situation and they want to get their home on the market as quickly as possible, before interest rates rise and reduce the demand," Magill said.

The Bay Area offers a built-in balancing act to strengthen the demand side of the equation, since Magill believes it is one of the best places to live, given the weather and standard of living.

"The population is still growing and the trend of people leaving the Bay Area following the dot-com bust appears to have slowed down dramatically. There are some bright spots on the economic front that will give buyers confidence," Magill said. "I advise buyers to continue to purse the dream of home ownership."

He cautions buyers to be cognizant of the rising interest rates and to ensure they can handle the cash flow for five to seven years or the typical time one lives in a home. "By this time, given previous trends, the home will have appreciated and there will be the possibility to refinance with possible cash out to relieve the situation," he said.

Realtor John Leslie of Alain Pinel Realtors in Los Gatos sees the spring market following the same pattern as the last three years.

"The spring market is still struggling with too few listings and too many multiple offers pushing up home prices. About mid-May there may be enough homes listed that the market will finally slow down again. Prices will stabilize and multiple offers will be rare. Until then, I advise sellers to keep up with the market and assure buyers that they shouldn't panic." Leslie said.