Most Americans believe the housing market has hit the bottom and that it's a good time to buy, in part because many also think rents will rise faster than home prices.

Fannie Mae's latest nation housing survey found that 70 percent of Americans think it's a good time to buy a home, up from 64 percent in January.

By an overwhelming majority, 78 percent, also believe home prices will either hold steady or increase over the next year, compared to 85 percent believing the same thing about rental increases.

While Americans expect rents to rise by 3.6 percent on average, home prices are expected to turn up only by 0.9 percent, Fannie Mae found.

Positive news on housing and real estate keep rolling in -- thanks in large part to federal home purchase tax credits and continuing near-record low mortgage rates.

Last week's pending home sales report from the National Association of Realtors illustrates the trend: Pending contracts jumped for the third straight month -- up by six percent in April -- and now stand 22 percent higher than the year before.

Every region but one -- the South -- racked up sizable gains in transactions heading for settlement. Contracts in the Northeast were up by nearly 30 percent for the month. In the West, they rose nearly eight percent, and in the Midwest the gain was about four percent.

The South's pending sales were less than one percent off from the previous month, but are still an impressive 31 percent above where they were 12 months before.

Home prices also appear to be moving on an upward curve, according to the latest Clear Capital Home Data Index -- which tracks price movements in thousands of local markets and Zip codes.

Palo Alto trend is not quite as clear - see our previous posting. At the same time, Palo Alto did not experience as big of a price collapse as some other areas.

The only sure thing about today’s real estate market is its unpredictability.  After a 19% jump in April this year, the market retreated, and the median price in May dropped by 15%.  Median prices in 2010 are 9% lower than in May 2009.  However houses are selling more quickly than before: more houses changed hands in May 2010 than in May 2009. Despite the median price decrease, 55% of homes on the market sold at higher than the asking price.

Palo Alto has always been and still is a magnet for Silicon Valley professionals who want to send their children to the highly recognized Palo Alto schools.  I’ve occasionally heard Palo Alto residents call our housing market a “Teflon” one, meaning it does not burn.

If you add to this unstoppable demand the fact that most of the houses are pretty dated, and, in general, the supply of houses in good condition is  limited, then you get the picture of our “Teflon”  real estate market.

The biggest difference now is in the price range in which multiple offers are triggered.  3-4 years ago, the most common “entry” point to South Palo Alto real estate was $1.2M-$1.3M.  Today this range slipped to $1M-$1.1M.  Very recently two sales in South Palo Alto in this “entry price range” generated 14 and 16 offers, respectively, and were both sold at more than $200,000 over the asking price.  The conclusion is: demand is as high as ever, but the ability of the buyers to pay is lower than before.

Overall market behavior is not stable and with no consistent trend.  The current economic situation definitely contributes to this unpredictable pattern.

Last month we started the Month in Review article with these words: “The median price of Bay Area homes rose drastically over the past year.  Palo Alto once again shows a strong demand for houses – multiple offers are not uncommon today.”  Well, the trend continues.  The April median price rose 12% over March of this year and a  whopping 27% over April 2009.  We’re only 7% below the all-time highs we experienced in 2007 and 2008.

The volume of sales is also on the rise.  April delivered a 19% increase in sales comparing with March 2010 and 11% over April 2009.  Judging by the number of pending sales, the upswing is not over yet.  As of May 1^st there were 63 properties under contract — a leading indicator for May sales.

April sales may have benefited from the now expired federal tax credit, as homebuyers rushed to take advantage of it while it was still available.  With the federal tax credit gone, the California tax credit is becoming a major factor influencing buyer behavior.  Even though $10,000 does not seem like much comparing with home prices in the area, we saw people delaying transaction closure in order to use this credit on several occasions.

Inventory is also going down as the number of sales exceeds the number of new listings.  A year ago we had 229 properties available for sale during the month of April; this year only 132, a 74% drop.  Inventory was growing a bit over February and March — a sign of a healthy spring selling market with sellers trying to take advantage of seasonal trends.

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The April median price rose 12% over March of this year and a  whopping 27% over April 2009.  We’re only 7% below the all-time highs we experienced in 2007 and 2008.

The volume of sales is also on the rise.  April delivered a 19% increase in sales comparing with March 2010 and 11% over April 2009.  Judging by the number of pending sales, the upswing is not over yet.  As of May 1^st there were 63 properties under contract — a leading indicator for May sales.

April sales may have benefited from the now expired federal tax credit, as homebuyers rushed to take advantage of it while it was still available.  With the federal tax credit gone, the California tax credit is becoming a major factor influencing buyer behavior.  Even though $10,000 does not seem like much comparing with home prices in the area, we saw people delaying transaction closure in order to use this credit on several occasions.