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If you are curious like me, chances are the thought of when to buy a home has crossed your mind. After all, prices have come down dramatically since the peak in 2005/2006. Moreover, the Government is artificially stimulating demand with historically low interest rates and by granting $8,000 tax breaks for first time homeowners if purchased before 12/31/2009.

Given this backdrop, has housing bottomed?

From a macroeconomic perspective, the answer is hell no. The unemployment rate is increasing at a parabolic rate, although the standard deviation and rate of change reflects a slower descent of late. Most economists predict a 9-10% unemployment rate by 2010. I personally see it going as high as 11.5%. However, these headline unemployment numbers are misleading. The unemployment rate does not factor in those employees working part-time but want to work full-time (under-employed) and those who have given up looking for work due to market conditions. When you actually factor these in, the augmented unemployment rate, as it is so called, balloons to 15% or so.

Think about that for a minute. 1.5 out of every 10 people either don't work but are looking, don't work and have given up hope or work part-time but want something more. Another number that is alarming is that 6.14 million people are collecting unemployment checks. That is about 122,800 per state and doesn't account for those that have exhausted their benefits. How in the world can house prices stabilize or even rise under this environment?

Another issue affecting the housing environment is the supply of unsold existing homes in the market. According to data from Bloomberg, the number of houses on the market stood at 3.74 million units. At the current sales pace, it would take 9.8 months to sell all these homes. A 5 to 6 months supply is typically considered a stable market. What's more, housing starts, which measures new supply by homebuilders, are running at a 510,000 annual rate. While this number is significantly lower than its peak of 2.27 million units in January of 2006, it is still adding to overall supply. These data sets are not encouraging at all if you ask me.

The current economic downturn is compounding the matter further. This is because the higher the unemployment rate, the more defaults and foreclosures. This adds to supply and further depresses prices causing an unwanted downward spiral. When people hear or see these headlines (unless you live in a cave), they then tend to worry about their employment

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