To ask "Will the value of houses EVER go up?" is like asking if the cost of living will EVER go up.....of course it will. So, the question really becomes "when?". 95403 (Northwest Santa Rosa) primarily consists of mid to low priced homes, many of which were snatched up over the last 10-12 years by first time buyers and investors, (many of whom got in way over their heads) or home-owners who saw amazing equity growth and access to "way-too-easy" money through home equity loans. 95403 also consists mainly of working class families, many of whom have seen job loss or reduced income......If you take all of that into consideration its easy to see why this area has also seen a huge majority of the city's foreclosures and Short Sales.
While we will most likely not see huge equity growth again, I beleive we are close to, if not at, the bottom in the under $350,000 price point in this area. While the 50+% equity growth of this past decade was a phenomenon that will most likely NEVER be repeated, I still firmly believe in Real Estate as a solid long term investment. I also believe that North West Santa Rosa will retain its desirability as an area of affordable, family friendly neighborhoods....and along with that desirability will come scarecity, and in turn...........appreciation. Its simply the nature of the beast.
It is important to remember several things;
1. I am speaking of homes below $350,000, which is the majority of homes in this area. In this price point as stated in the previous answers, especially in the desirable areas of 95403, we have already seen increased values....a classic example of Supply and Demand.
2. Homes above the $400,000 range and up are a different animal all together. These higher priced homes, that had seemed almost un-touched by foreclosure, have begun to slip. With more high priced foreclosures coming into play, I believe this price point has a ways to go before hitting it's "bottom".
3. Much of this question of "when?" lies in the hands of the lenders who are literally controlling the market right now. With another large round of loan resets looming and the large inventory of already foreclosed homes waiting in the wings....the direction of the market depends largely on the which direction the lenders chose to go.
So, without a crystal ball....the "when?" is all a matter of opinion and speculation.....and keeping a close eye on changes in the local market. There are several good internet based tools available that help you monitor the market movement in YOUR neighborhood.