I just pulled some Sold stats for Saratoga dating back from 2006-2010 to give a better perspective and reference point of where this market is and comparing the past 5 years.   

Looking at the stats below it clearly shows that the peak was in 2007 with sales of homes in the
 $1-2M=209, $2-$3M=69 and $3M+= 32.

In 2010 home sales in the $1M-$2M with 195 units sold was almost as high as 2007 levels. In the $2-$3M range with 48 units sold, you can also see it made a dramatic turnaround from 2009 levels. 

If this trend continues we shall see prices slowly creeping up but not as quickly as the past.  The statistics also shows that the $3M+ range is still lagging which bodes well for buyers, but with the strong demand in 2010 for homes in the $1M-$3M range, at some point with the job market and mortgages starting to stabilize somewhat the demand will be back.