Quick economic test question

for the last six months, many here have said over and over that unemployment is a lagging indicator. perhaps its finally starting to sink in that unemployment is an individual and collective disaster that continues to grow and is clearly exceeding many previous worst case predictions.

Can this question be answered in a vacume?
Can one single variable correlate to one particular outcome?
NO
What if we add one variable, rise in interest rates to rise in unemployment. Now what?
'It all seems so easy to predict where this market is headed.'
OK, you have my attention, paint the picture for me...where are we going.
I'm not so sure.?

Rising government spending exacerbating our deficits, driving down the dollar and up the cost of commodities, inflation,

well now the media phrase is a "jobless recovery." isn't that an abstraction that no one cares about, ie. GNP turns up every so slightly but no jobs. that's a recovery? for whom?

the unemployment rate is now roughly twice the so-called norm to an all time post war high?

can we safely assume that the unemployed are not going to buy re?

for every one who's unemployed, how many are in fear of being unemployed or are underemployed? can we safely assume that this group too is not in the market to buy re?

corporate productivity gains have hit an all time high; more babblespeak for lay-offs and corporations are catching on that they didn't need those people and there will be continuing pressure (as there always is) for greater profits that can only come from less expense because the top line isn't growing.

are some people buying? sure. are they all looking for reductions from previous comps? mostly.

seems like down is for sure. for how long and how far is anybody's guess but directionally? seems clear.

People must buy real estate with money.
People get money from several places. Most of it ends up in a person's tax returns. - Earned income (the taxable money you make from your job or business), from passive investments (let's say you invested in a business that produces cash flow, then that money too is taxable as income), capital gains (you bought something and sold it for more - again this ends up on your tax returns) - inherited money (it's a one time event so won't help you qualify for a bigger loan payment, but certainly very useful for down payments etc) People also get money as gifts (some say 70% of first time buyers in NYC get help from parents.)

And the final way (I can come with off the top of my head) a person can get money is by borrowing against your assets (this money does not hit your tax returns) - for instance you buy an apartment for $1M and in ten years it's worth $3M. Then you refinance and pull out money. Basically you've made $2M and none of that's taxable, but it's real economic gain that helps you afford to buy more "stuff."

So this is where I'm headed with this. People have a defined buying power. You take that defined buying power and match it up with today's lending requirements and a person can get a total value of what they can borrow to buy a house. Each person has a max amount they can borrow at today's lending requirements.

My point is that now with the diminished buying power from individuals (total wages are down, capital gains are down, etc) and the more restrictive lending requirements - that these two constrains dictate the fact that we go lower.

I do not buy the theory that prices must fall in line with income (because there are many ways people can get money to buy) but I do buy into the theory that with prudent lenders like we have today, there just isn't enough money in the world to support $1,000/ft housing in NYC. How do I know this? I don't. It's an assumption, but I'm making important economic decisions based on my assumptions.

Time will tell but I suspect the sales numbers that will come in October will show a bigger decline in the median and average sales prices. When buyers see this they will get even tighter with their dollars and the "low ball" offers being made today will be even lower then. Just because contract signings are up doesn't mean prices are going up. And in fact, increased sales numbers don't mean prices are going up. In Vegas they've had something like 26 months down (they are down 58% now) but for more than a year now they've had month over month growth in the number of sales and in fact last month was near an all-time high in the number of sales).
Like my old boss use to say - "the best way to tell that prices are going up is that prices are going up."
No one should buy their first home in Manhattan proper now.
We go lower from here.