The inventory is always low this year inventory in all classes is at historic lows. There is just not a lot of turn over in Palo Alto multifamily homes since the rental market is always so good here and many investors buy and hold for decades.
However, this year the multi family home inventory is low everywhere, not just Palo Alto. It is almost as hard to find one for sale in surrounding cities like Menlo Park, Redwood City, and Mountain View.
That said, inventory is low right now because rents are strong and sellers want to enjoy healthy rents for awhile rather than selling.
Many multi-family buyers are just looking for properties they want and making an unsolicited offers.