PALM DESERT, Calif. -

Victor Diaz, of Banning, is looking to buy a three-bedroom, two-bath home in Palm Springs.

"I bought a house in 2005 at the peak of things and got rid of it in 2008. Since then I've been sitting tight, but I think now's the time," said Diaz.

The housing market is showing signs of life. New interest from buyers around the country and in the Coachella Valley is leading to a surge in prices. Home prices rose by almost 11 percent over the last year, according to the S.& P. Case-Shiller home price index.

"I think we're going to return to the term, 'normalcy,'" said John DeLeo, a Palm Desert real estate agent and instructor at the Desert Cities Real Estate School.

He says in the Valley, baby boomers are investing in pricier homes. Low interest rates, sometimes below 4 percent are also enticing entry level buyers.

"There's still a lack of consumer confidence but that's changing. If we hold course, we're going to have a great season," he said.

DeLeo said the median price range for a desert home was $300,000 in 2006. It dropped below $200,000 around 2007 and now is beginning to rise.

Diaz, a former loan officer, says $200,000 is his cutoff, his safety net.

"Now I'm taking my own advice and taking my time," Diaz added.

However, could the housing bubble burst again?

"Of course it could, but overall, we're back on track," said DeLeo.