“Take note: be afraid of inflation, very afraid. If mortgage interest rates jump up to 10%, all this housing price decline won’t matter relative to actual monthly house payment.”

I have been afraid of inflation but I am a HUGE number cruncher. The amount down on a 10% rate would put my payment lower due to what the price of the house would come down to (and more interest write off/lower property taxes). For the 3-5% down buyer I totaly agree with this statment. For the 30-50% buyer I disagree though.