Yes, it is possible that some areas are at or very near the bottom. The evidence of this won't be found in statistics, which only report the past, but in experiences such as yours. There are many examples of multiple offers these days. This doesn't mean that boom times have returned, but that there is a great deal of demand for the many great bargains that are available today.
Banks, after years of being foolish, are being extremely cautious these days. Hopefully you can get the seller to accept the appraised price or possibly get the bank to review and adjust the appraisal so that you can get the home you want.
To answer your question I would have to look at the current market status in 95130. The graph below shows a market that is acutally a bit healthier than some markets. Inventory has come down from the high as should be expected this time of year and may be on the rise.
Based on current activity ofn this past week, more homes were sold in the 95130 area than listed. Which may mean stabilization for that market. Also keep in mind that the Spring is always fairly active.
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Also when you made your offer it should have been contingent upon appraisal. If so you should go back to the sellers and see if they will adjust their price to the list price of the home.