Unemployment: the X factor in the housing recovery process.  Inventory has to be absorbed by a shrinking demand pool at every pricepoint...especially higher end properties.  If you look at national numbers as they relate to unemployment, the areas that already have the largest inventory (sunbelt) also stand to be hardest hit by the recession in terms of unemployment.  That was Reagan's biggest challenge and the way that he dealt with the "perception" of high unemployment was revising the criteria over 20 times for how we count those who are unemployed.  Unemployed people don't buy houses and don't keep houses; they don't buy flat screens, and they don't buy cars, computers, or airline tickets OR PAY TAXES.  70% of our economy is driven by "consumption" and that is the other side of the capitalism coin.

I believe that the recovery has already begun...however, the rehab process is going to be long and painful, particularly in the sunbelt!