More jobs and less houses?

2011 finishes with 2 major indexes showing the lowest levels in 3 years for the Portland Metro area.

1. Unemployment = 8.9%.  We have finally broken the 9% floor and continue to move lower.  Dropping 2 tenths of a point from November, after being seasonally adjusted.  The highest level reached was 11.6% in mid 2009 and has been generally declining ever since.
2. Unsold housing supply  = 5.3 months inventory.  This is the lowest level of inventory for the last 3 years reporting. The highest level of inventory was early 2009 and reached near 20 months.  That's almost 2 years supply of homes on the market.  It hasn't been a steady decline the last 2 years.  It's been more like a yo-yo, due to 2 significant tax incentives. These incentives increased buyers activity before those key times, and then were followed with sluggish behavior, until 2011, which appeared to be a steady decline.

We know that buyers have been helping gobble the inventory because low home prices and low interest rates, are making record low monthly payments.  Also, inventory has been held low, as 2011 has shown less foreclosures being taken back by the banks.

But let's be frank.  Without jobs, there is no consumer confidence.  Potential buyers with fear that any day they will be next in the unemployment line, won't be shopping for a house. 

Therefore, it is no coincidence that these 2 indexes are declining hand in hand.  Although, 5.3 months inventory is a great number in the real estate world, 8.9% unemployment is no figure to write home about.  And with economists still threatening that banks are withholding a large number of shadow inventory yet to hit the market, we should still stay on our heels.  But, the clouds are lined with silver now.