Next year "government interventions will start to disappear, shadow inventory will hit the market and mortgage rates will start to rise" to around 6 percent from under 5 percent, he said. "We're in a false state of stability."Predictions from RealtyTrac:
Shadow inventory includes houses that banks now hold but have yet to put up for sale.
Double-digit unemployment will push more owners into foreclosure, further destabilizing the housing market and pressing prices down another 5 to 10 percent, said Flint.
Foreclosures could escalate to 4 million in 2010, RealtyTrac Senior Vice president Rick Sharga said.
"Unemployment, negative equity are driving factors, as is credit availability," he said. "We don't believe we will get back to normal levels of foreclosure activity on a month-to-month basis until probably the end of 2012, and we will still be going through the shadow inventory well into 2013."
Banks will place the unsold homes on the market at a measured pace to thwart prices on all homes from falling off a cliff anew, he said.