Both Bruce Norris and Carlos Royal studied this pretty closely and came to this same conclusion regarding trends in real estate prices. As unemployment rises over ~6.5% real estate prices start to get very soft. Who takes on a 30 year commitment when they’re afraid of losing their job? Especially when it’s a lot higher than their rent? There was a point in the 1980’s where CA real estate was going through the roof and the mortgage interest rate was ~12%, but unemployment was under 5%. Of course, many factors contribute, but by far the most powerful looking factor seems to be unemployment.
