Theresa, below is a link to check the water supply in Maricopa County where Surprise is located.
The utility bill will depend on many things. Some people are more conservative than others and obviously the most expensive time is during the hottest summer months when using air conditioning.
Regarding Surprise area closings and depending an what type of property you're looking for (condo, townhouse, patio home, single family, etc) here's what I pulled up today comparing Jan-Nov 2009 to Jan-Nov 2010:
Pricing in Condos are down 8% with the average this year $81,000
Patio Homes are down 14% with the average this year $139,000
Townhomes are down 17% with the average this year $96,000
Single Family homes are down 1% with the average this year of $150,000
Interest rates are low right now and who knows what they'll be in 3 years. As far as being able to predict where we'll be in 3 years in housing given the current economic situation and taking into account the confidence level of the american public, I'd need to buy a crystal ball. Arizona has great buys right now and will always be a popular place for retirement and with all the baby boomers that are retiring now and in the near future, I think Arizona is a great bet!
Additionally if you have not been to the area, I would strongly suggest you come here and spend several days checking out the area you plan on retiring in. You may find you like one particular area better than another especiailly if you plan on living there for the rest of your life. :>)