since interest rates are so low, the price of land and real estate are artificially inflated. Therefore once the rates start going up (which they will since there is almost no way they can go any further down) real estate will not appreciate as it is known to normally do, but it will end up dropping in price.
Think of it this way, say there is a house that 5 years ago was $200,000, and the interest was 7% paid out over a 30 yr loan.
P = [(r*M)/[1-(1+r/n)]^-nt]/n
where P = the payment, r = the annual rate, M = the mortgage amount, t = the number of years, and n = the number of payments per year.
you get a monthly payment of $1330
Now if you were to buy that same $200,000 house with a 3% interest payment over 30 years you would pay
$843 a month, which is quite a difference, and now people who could not normally buy the house/land can easily afford to do so. But, now the seller sees an opportunity to make some money, so what do they do? raise the price to $250,000 instead of $200,000. By doing this the monthly payment at 3% over 30 years would be $1054. This is still much lower than what someone would be paying 5 years ago,
Why can they do this? Supply and Demand. At a lower payment more people are able to afford the house, greating more demand for more houses, which as a result drives up the price. The purchaser of the house is still happy b/c they still end up getting a bigger house than they thought they could afford, and the seller makes a nice profit at the same time. The problem will come down the road when the current owner goes to sell the house and interest rates are back up.
If they are back up to 7% and are trying to sell the house at $250,000 and a 30 year loan, the payment is now $1663 a month. That is going to be much tougher to sell to someone b/c its nearly 60% higher than what you are currently paying for it, so the demand will be low and nobody can afford to buy it. So in order to sell it the owner has to drop the price, which ends up causing them to lose money.
So basically, right now isn't a bad time to buy a house that you plan on staying in for the rest of your life, but if you plan on buying some land or a house that you hope will appreciate in 1-5 years and sell, you have to watch out.
Hopefully all of that makes sense