I’m asked all the time about what I expecting to happen in the local real estate market over the next year or so.  

While my crystal ball is no better than anyone else’s, I do have some opinions based on my experience and a good understanding of the cycle of real estate.

First: Prices don’t go up quickly forever. There’s a limit as to what someone is willing to pay for real estate and also what they can afford.

Supply and demand control the market. When you have low inventories coupled with record-low interest rates, a lot of buyers compete to buy a limited number of properties.  This is when prices go up — sometimes way up.  

Alternatively, when interest rates climb and prices rise too high too fast, a lot of buyers are priced out of the market. With fewer buyers, inventory starts to build up and sellers eventually reduce their prices.

Now, back to the question of what could happen in the next six to 12 months. I don’t believe real estate activity can continue at its current pace much longer. I also don’t believe the market is headed for a crash similar to 2008 anytime soon. What I do expect is for the market to become less exuberant later this year and return to a more reasonable level next year as interest rates creep up.

Here are some other things to think about.  

Remember that all real estate is local, so don’t get wrapped up in national stories about what’s happening in New York, Los Angeles or even Denver. The Mesa County real estate market reacts differently to economic events than other areas — sometimes positively, sometimes not. 

Also keep in mind the real estate market cycles about every seven to 12 years. Even if you purchase a residential or commercial property today, you’ll probably own it for seven to 10 years or more — just in time for the next real estate cycle.  

And, yes, this is still a great time to sell and a good time to buy while interest rates remain low.