Seattle’s Strong Employment to Save Home Prices (Or Not)

Unlike the other cities across the country that experienced surging prices and are now seeing price declines, Seattle will be immune from such forces. Why? Because of our strong employment, of course! Here in Seattle, our job market is so much better than the rest of the country, there’s no way our home prices could falter!

Wait, really?

Let’s check out the latest unemployment statistics to see how that claim holds up. In the table below, I have compiled the September unemployment rate and the Case-Shiller HPI YOY change (as of July). For the nationwide statistic, the Case-Shiller HPI refers to the 20-city average. Metro areas are sorted by unemployment rate, in descending order.

  Unemp.   CS-HPI   Source
Nationwide 4.7% -3.91% Seattle Times
Detroit 7.9% -9.69% Detroit Free Press
Las Vegas 5.2% -6.14% Nevada Appeal
L.A. County 5.1% -4.75% L.A. Business Journal
New York City 5.1% -3.78% New York Sun
Charlotte 4.8% +5.97% BizJournals
San Diego County 4.8% -7.78% Signs on San Diego
Boston 4.7% -3.37% Boston NOW
San Francisco 4.2% -4.14% San Francisco Chronicle
Miami-Dade County   4.1% -6.45% South Florida Sun-Sentinel
King County 3.9% +6.86% Seattle Times
Phoenix 2.8% -7.30% Arizona Republic

Is it just me, or does that data appear to be all over the place, with little to no correlation between unemployment and the trend of housing prices? Let’s take a page out of Deejayoh’s book, and check out a scatterplot:

Unemployment Vs. Home Prices
Click to enlarge

Nope, not just me. There appears to be little to no correlation between unemployment statistics and home prices. Since unemployment statistics are generally considered to be a decent measure of the relative strength of an area’s job market, I think we can yet again conclude that “strong employment” is not sufficient to prevent home price declines.

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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.


  1. 1
    deejayoh says:

    That article posted today in the Times about job growth is interesting
    Construction carries weight in September state job gains

    We lost 1100 jobs, drive by government job losses – but much of the private sector job growth that made up the slack was driven by construction. 1500/4300 new jobs – about 35%. I guess it could be true – judging by all the cranes in Bellevue and the holes in the ground they are digging at Microsoft.

  2. 2
    Mike2 says:

    And since unemployment is a lagging indicator, it’s not especially useful for forward projections either.

  3. 3
    ken says:

    Unemployment numbers is the biggest joke. Lets call some people and ask if they have a job, if they don’t are they looking?

  4. 4
    CCG says:

    Please. Buying a house by taking out a loan that you actually have some chance in hell of REPAYING someday based on your ACTUAL INCOME is so old-fashioned.

  5. 5
    laxtosnoco says:

    Tim, I like the concept of what you’re doing, but I don’t think a snapshot-in-time simple regression is the best way of looking at the data. It’s hard to make the case that current employment rates are the best predictor of a YOY % change variable (CS HPI).

    Still, the graph does show that areas with full employment (SF, PHX) can see drops in housing prices.

  6. 6
    MrRational says:


    It may be true that unemployment statistics have no correlation to home prices but claiming that they do based on a regression of 12 data points is not a statistically-significant analysis.

  7. 7
    Cynic says:

    Unemployment numbers can’t be used like this. If you’re not looking for a job you don’t count. So unemployment numbers is retiree havens like Miami and Phoenix are artificially low.

  8. 8
    jon says:

    Boston’s unemployment is low because so many people are moving away. The employment level would be a better indicator.

  9. 9
    notabull says:


    As much as a agree with the whole premise of what you’re trying to say, it’s not the unemployed numbers/percentages that matter. It’s the net amount of NEW jobs in the area that people refer to when they are saying that jobs will keep prices up. I think in their mind it’s all related to people coming in to the local property market because the strength in jobs is bringing in people for highly paid local jobs. Microsoft, Boeing, blah, blah, blah. All that crap.

    So, I think you might want to look into the number of net new jobs per capita for each area and look at things based on that stat. Also, if you can find the net number of new jobs and the median wage, that might give even more interesting information about those people that are coming in to the area.

    That’s my opinion anyway. I still don’t think you’ll find a correlation…

  10. 10
    The Tim says:

    Thanks for all the feedback, everybody. Give me a few days/weeks to spend some time digging through the BLS and I’ll try to come up with something better / more interesting.

  11. 11
    Jon says:

    CCG said,

    ON OCTOBER 24TH, 2007 AT 11:40 AM
    Please. Buying a house by taking out a loan that you actually have some chance in hell of REPAYING someday based on your ACTUAL INCOME is so old-fashioned.

    What are you talking about CCG? You are clearly one of those old people who just don’t get The New Economy! ;-)

    I mean it’s clear that John Law was right to inflate the money supply arbitrarily for his purposes, people just lost faith. This time they won’t. ;-)

  12. 12
    rose-colored-ghoulaid says:

    What’s with everyone complaining about the significance of unemployment levels.

    IIRC, (un)employment statistics are an excellent source of information if you are curious how many people who acknowledge they are looking for a job in an area have some job (no matter how McCrappy). At least within some standard deviation of the results (which is oddly rarely printed along with the number).

  13. 13
    Peter says:

    San Francisco thinks they are very special and there will not be a downturn there EVER too.


  14. 14
    laxtosnoco says:

    Tim, I tried my hand at the data and uploaded a couple of charts in the forum section (Unemployment vs. Housing prices post). I think there’s clearly a link between price increases and unemployment levels, but unemployment is not a foolproof predictor.

  15. 15
    rose-colored-ghoulaid says:

    Maybe I read this wrong, but I thought Tim’s point was that low unemployment was no magic bullet. You’d clearly have to be insane to argue that employment and housing prices are completely disconnected. Imagine the extreme cases. Same city, same population, but it has either 50% unemployment or 5% unemployment. Assume that all employed citizens make median wage and all unemployed make between $0 and welfare money.

    It’s pretty obvious that in a world like that the housing demand and thus the price should be higher in the city where people actually have incomes. What’s not clear is whether either city will have rising or falling prices. If they are stabilized, the prices should be steady. If they are not, the prices should be correcting towards the norm.

    Correct me if I am of base Tim, but that’s how I read your post.

  16. 16
    george says:

    Isn’t the Seattle unemployment spike seasonal?

  17. 17
    softwarengineer says:


    CPI is 2-3% and we’re all working $70K jobs in Seattle.

    How about CPI is more like 8-12% out of our pockets for groceries, heat and gas; hey, did you guy’s get your 5% property tax increase from King County on your home that’s collapsed in value?

    In 2003 there was a 6.5% unemployment rate of electrical engineers, but a year or two later it drops to 2.5% IEEE reported….why you say? The companies stopped hiring so many, in no time they’re off the numbers in happy Radio Shack jobs.

    Ebay sellers aren’t in the unemployment numbers either. Do any of you have educated spouses that were unemployed but tried to get back into the market? Its embarrssing and no one talks about it; but the entrance levels for degreed jobs plummetted after 2001….like $10/hr. I heard Boeing was bringing in a bunch of new hires, $10/hr. Forget finding this tidbit on the news, its not there.

    “Welcome to Walmart, can I help you”

  18. 18
    jon says:

    “You’d clearly have to be insane to argue that employment and housing prices are completely disconnected.”

    The fact that some people don’t have jobs is tragic, but they aren’t in the housing market unless they are forced to sell because they lost their job. That just isn’t happening that much, not yet at least. The factors that are in play right now are different. Mortages resetting, credit crunch, people cashing out, job growth or loss is what is happening.

  19. 19
    cow cat says:

    It’s really rather simple:

    Just because someone has sufficient income doesn’t mean they’ll be willing to pay the price you wish.

    That is, buyer motivation and sufficient funds are separate concepts. Part of the motivation of the past few years was truly due to the madness of crowds: People who would have normally dragged their feet jumped in because everyone else was.

    If everyone else stands aside, most people will too, despite what they make in a year.

  20. 20
    notabull says:

    “You’d clearly have to be insane to argue that employment and housing prices are completely disconnected.”

    Absolutely. I just don’t think that the unemployment *rate* is the right measure that will give the best idea of what’s happening. Sure, during a recession the unemployment rate will go up and the house prices might go down (or rate of increase goes down). But the unemployment rate is driven by too many other factors. IMO, the net increase in new jobs, somehow combined with the net increase in migration to the area, AND the median of those jobs, will give a better indication of the demand for housing.

    Just my opinion…

  21. 21
    Tim's Point says:

    Look – it’s really easy to figure out what Tim’s “point” is. He’ll do anything and everything to try to dance with glee that prices may be dropping in Seattle. I had milk with my cereal this morning, and because of that (and I suspect – because Tim is stuck in Kenmore) the people who live in Seattle are going to lose money on their homes.

    I’m going to eat lunch today as well, when that happens – Tim will post and boast about how smart he is because he figured out that (shocker) housing prices can’t continue at an annual 10% gain. You’re a genius!

    Tonight, I will eat dinner, somehow that will correlate to housing prices going down. Tim will get on here and morbidly get excited that perhaps some folks overpaid on houses in the last year or 2. He’ll put up some fancy charts and then gloat about how smart he is. Most of you will grovel before him because you also don’t live in Seattle but wish you did.

    Keep it up, this site is extremely amusing.

    Use some common sense guys. That will usually help finish off sound analysis. What you’re not talking about here is that our unemployment is low yes, but we also have a signifigant number of HIGH PAYING jobs. i.e. Microsoft, Boeing, and the high tech community of Adobe, Google, Yahoo etc etc etc. Gee – do you think that the fact that SF and NY and the like also have many white collar high paying jobs, and that their in city desirable neighborhoods are virtually bubbleproof apply here to the likes of Wallingford, Ballard, Queen Anne, Madison etc? Nah – couldn’t be. You see, because I used milk in my cereal this morning.

    Right Tim? Enjoy Kenmore.

  22. 22
    Angie says:

    Tim, I’m with a few of the posters above—I think the connection you’re trying to prove or disprove in the graph isn’t the most telling information.

    Totally unrelated to unemployment numbers, but an observation I wanted to throw out here in the event someone has some backstory (heaven help me if I wade into the forums here, I’m just not gonna go there). I keep an eye on what Zillow has to say about house prices. Typically it would update numbers every couple of weeks or so, but it’s been maybe six weeks since the last calculation (on 9/11/07, anywhere I poke around in its Seattle maps). Anyone know why? Market info too volatile to trust? That’s hard to believe since their trendlines for properties often have a lot of fluctuation. Problems with the business itself? Unwillingness to be the bearer of bad news? I’m curious and figured this crowd would know, if anyone would. Thanks!

  23. 23
    deejayoh says:

    Tim’s Point said,

    Look – it’s really easy to figure out what Tim’s “point” is. He’ll do anything and everything to try to dance with glee that prices may be dropping in Seattle. I had milk with my cereal this morning, and because of that (and I suspect – because Tim is stuck in Kenmore) the people who live in Seattle are going to lose money on their homes.

    Well, actually it depends on what kind of cereal you had, with a slightly less significant dependence on the fat content of the milk.

  24. 24
    Tim's Point says:

    Yep – probably does. Maybe we can see a nifty regression analysis on that as well. Scatter graphs on milk fat content versus Miami Dade county prices. It’s so funny it’s true. Just like the run up to the Iraq War. Cherry picking at it’s finest. Tim shows you what backs up his argument then makes a blanket statement. Like I said – it’s really amusing. This entire post could be destroyed by adding one piece of data – number of new condos build in each metropolitan area. I believe there were 60K built in Miami. Could that have an impact on prices -and the fact that Las Vegas and Miami have seen such extreme depreciation? Nah…it’s that we’re all screwed in Seattle!!!! Watch out for the bird flu – super bug – SARS etc. Plus – we’ll all be bankrupt soon that live in Seattle.

    Well, that and the kind of cereal I ate.

  25. 25
    The Tim says:

    Wow, “Tim’s Point.” Clearly your position is air-tight, and completely unassailable. You sure have me figured out, yup. I’m living a miserable life in a squalid backwater slum, and my only pleasure comes from making specious arguments to distress homeowners and real estate salesmen.

    Or maybe it’s just that the fundamentals—yes, even those high incomes you hold in such regard—simply do not support the belief that prices will hold at their current levels.

    I truly do enjoy comments like yours. Anger + passion + rambling + blind faith in an unsupported belief = a highly amusing read.

  26. 26
    Tim's Point says:

    “Anger + passion + rambling + blind faith in an unsupported belief = a highly amusing read.”

    Hello Pot? This is Kettle.

  27. 27
    The Tim says:

    Oh seriously, come on. You can do better than that. That’s not even a little bit convincing.

  28. 28
    Ira Sacharoff says:

    Saying that Wallingford, et al are “virtually bubbleproof” is like saying the Titanic is “virtually unsinkable.”

  29. 29
    Tim's Point says:

    Maybe not to you, but I think it probably stings you quite a bit considering how quickly you responded. What’s your goal here anyway? Are you recruiting the for the local republicans? Or do you just love getting your ego stroked every day?

  30. 30
    The Tim says:

    “Stings me quite a bit”? Now that’s funny.

    Also, the bit that you keep hammering about Tim Eyman and the republicans is pretty good too. You should definitely continue to develop that routine. It’s especially amusing since most republicans I know are gung-ho on the housing market and real estate industry.

  31. 31
    Tim's Point says:

    Ok, so it’s your ego getting stroked. Got it. Thanks for clearing that up. lol

  32. 32
    darth_s says:

    I haven’t blogged here for a while because I’m busy lately. However, I want to make some comments now:

    My previous prediction is that home price in Seattle will go down around 15 – 20% in the next 5 years. Now, my prediction is that it will go down 25 – 30 %. Why? Several factors:
    – The loan reset chart shows that the Option ARM wave of reset won’t peak until 2010. Seattle does not have a lot of Subprime, yet it has a lot of Option ARM.
    – I personally know of 3 young people, just got out of college in the last few years that bought 2 and 3 properties. With almost no saving, what kind of loans do they have? Pretty much these crazy Option ARMs.
    – In some new developments, price already came down 10% or more. For example, there is a Dreamcraft development in Renton Highland that recently cuts price up to 60Ks in some models. Therefore, some of the early buyers there already have instant equity loss of 60Ks. Ouch!

    So, anyone here is thinking about buying a house around here, you should think about not make even for the next 10 years. Talking about 10 years of DEAD MONEY, that’s painful.

  33. 33
    B&W Nikes says:

    I’d ask the gnome named Tims Point what the stable of tiny ponies in his attic think about moving into his Barbie Dream house kitchen when property prices in Seattle rise gloriously to match NYC and San Francisco as his crystal ball projects they will? Will they be happy, or miss their privacy?

  34. 34
    Affluent Bitter Renter says:

    Given the posters on some of the other Seattle RE boards, one might identify some candidates for the person posting as “Tim’s Point”.

    Good that you have so much time to post T.P. – RE market being a bit slow for you?

  35. 35
    TJ_98370 says:

    Hey Tim’s Point,

    What’s your story? You are obviously quite emotionally invested in the real estate market. You’ve got something at risk and you see the storm clouds on the horizon?

  36. 36
    deejayoh says:

    I always find that ad hominem attacks really make the case. really. Perhaps you should also call Tim a “scrub” and accuse him of living in his mother’s basement.

    FWIW, I’d include being accused of being a republican in that category – but that’s just me ;^)

  37. 37
    Onlooker says:

    Speaking on Angie’s previous mention of Zillow’s stats. Shouldn’t their Q3 housing report be out already? Q2(April-June) came out about 2 weeks into August. So I would think that July-Sept would have been out in mid Oct. They had a pretty nice spreadsheet that I’d love to see updated.

  38. 38
    DDX12000 says:

    Why is anyone taking the time to respond to Tim’s Point? TP is nothing but a bitter RE troll slowly being crushed by the imploding bubble. Not only is he a troll, but one of the imbeciles buying into the ‘Seattle is Special’ pipedream. Seattle is no different than any other bubbleicious city, just a different flavor…Pretty Pink Pony Bubblegum.

  39. 39
    Affluent Bitter Renter says:

    “Why is anyone taking the time to respond to Tim’s Point?”

    Because he (and his ilk) are very amusing. We have a ringside seat for our very own tulipmania in real time, and get to watch the frantic tulip-sellers desperately trying to prop up the market so they can broker a few more sales (and, not incidentally, unload their own tulips).

    If everyone would only Believe (shades of Peter Pan) the market would go up forever and ever. So the doubters are 1) Scrubs, 2) whiny children sleeping on their mother’s couch, and 3) destitute; who simultaneously are of no importance whatsoever, yet somehow are able through their evil rumors to wreck a market that otherwise would be stable, serene, and profitable.

    You can’t beat this for entertainment!

    (The stock bubble was nowhere near as fun, since those pesky SEC regulations prohibited the flights of fancy that RE types use in their marketing.)

  40. 40
    disbelief says:

    “What you’re not talking about here is that our unemployment is low yes, but we also have a signifigant number of HIGH PAYING jobs. i.e. Microsoft, Boeing, and the high tech community of Adobe, Google, Yahoo etc etc etc.”

    Yeah, right! that’s never been talked about here. Actually it has, and more than a few employees of the companies you mention have stated their disagreement with the notion that these companies offer mostly high paying jobs. Why did Boeing move it’s HQ? Why are they sourcing from China? Why are they sourcing from smaller parts manufacturers to an increasing extent? Why does Microsoft utilize foreign workers on work visas paid significantly lower wages than the workers they serve to replace?

    If I were to average salaries at Microsoft, I would no doubt arrive at a relatively high average salary. It would however be an average of the folks very high up making many millions per year (or hundreds of millions at the very top), down to the much higher number of people making modest salaries.

    I would agree that employees of these companies make, on average, higher salaries. The point is, however, how much higher? Do the majority make twice the average salary, lets say $100K – I bet they don’t.

    Can prices keep rising in spite of what the average salary actually is? What is the limit? That is, I believe, the question that the Tim and others here are exploring. I don’t think the Tim has ever taken the position that his propositions are infallible. You, however, have nothing to bring to the argument besides nonsense. And yes, with your emotional “argument”, it’s quite obvious that you are vested in the real estate market and bitter at the thought of a decline

  41. 41
    TJ_98370 says:

    A possible meanigful and unique way to monitor local real estate distress is to track the number of “econ 101’s” and “Tim’s Point’s” that post attacks against the Seattle Bubble blog. (measuring units could be “trolls per day” or even something like “Meshugies per month”).
    There seems to be a recent increase and I can’t help wonder whether market events / conditions are making these types increasingly uncomfortable to the point that they are looking for someone / something to blame.

  42. 42
    Affluent Bitter Renter says:

    “There seems to be a recent increase and I can’t help wonder whether market events / conditions are making these types increasingly uncomfortable to the point that they are looking for someone / something to blame.”

    Also, they have a lot more free time on their hands…

  43. 43
    deejayoh says:

    This just in from the bubbleproof city of SF…

    In the Bay Area, sales of existing, stand-alone homes plunged 45.6 percent between September 2006 and September 2007, while the median sales price slid 5 percent to $702,240. September’s median was a whopping 17.7 percent below May’s peak of $853,910.”

    “‘We see a sea change almost overnight in the Bay Area,’ said Robert Kleinhenz, economist with the California Association of Realtors.”

    “Analysts said the current downturn is already more severe than the housing slump of the 1990s, and they predicted that before it is resolved it will rival the 1980-82 slump.”

    Make that “formerly” bubbleproof

  44. 44

    meshugies per month does have a certain ring to it.

  45. 45
    Angie says:

    I like it. Mesh/Mo.

    Prices dropping in San Francisco? Median of only $700K? Why, any day now it’ll actually be affordable!

    Or not.

  46. 46

    […] covered this subject pretty thoroughly here before, and a present-day example can be seen down in San Diego, where employment is still […]

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