Fast-rising unemployment predicts further substantial house price declines

You don’t need fancy econometric analysis to see these series (British unemployment in red and average British house price in yellow) are negatively correlated:

Graph of British unemployment vs. British house prices

Original graph from MoneyWeek article.

Given that U.S. unemployment is taking off like a rocket (up from 6.9% in Q4 ‘08 to 8.5% in March '09) and many believe unemployment will exceed 10% — not to mention massive underemployment and millions more who have despaired of finding work and are thus not counted as “unemployed” — it’s virtually certain we’ll see continued substantial house price declines.

Posted by James on Friday, April 24, 2009