Industry insiders expecting home prices to resume fall...

NEW YORK (CNNMoney.com) -- After four months of gains, home prices flattened in October. Worse yet, industry insiders think that they'll soon start to fall.

Prices have risen more than 3% since May, according to S&P/Case-Shiller. But most forecasts predict price declines in 2010, with possible losses ranging from anywhere from 3% on up. Fiserv Lending Solutions, a financial analytics firm, forecasts that prices will fall in all but 39 of the 381 markets it covers, with an average drop of 11.3%.

"We've seen recent price stabilization because of low mortgage interest rates and the impact of the first-time homebuyers tax credit," said Pat Newport of IHS Global Research. "But there are really good reasons to think prices will now start going down."

There are three main reasons for the reversal: a coming flood of foreclosures, rising interest rates and the eventual end of the tax credits.

The above is a snippet of a CNNmoney.com article from Friday, January 1st.

Take a look at this mortgage interest rate comparison:

4.5% on a $400k loan = 2025.19/mo
8% on a $276k loan = 2026.74/mo
Right now...we are at about a 5%+ average mortgage rate...it has risen the past 3 weeks, and that is with the feds direct involvement with the rate mechanism. If the feds "backs away" from direct involvement some time this year, rates will surely increase. It is not too inconceivable that rates could rise to 8%, which, in the example above, reduces the buying power of the representative buyer $124,000!

If the "blame" for the housing bubble has been "low interest rates and loose lending standards" what possible effect will the opposite have? Couple higher rates, extremely tight/restrictive lending standards, the end of buyer tax credits and a wave of bank-owned homes...It's not a pretty picture being painted.