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Originally Posted by olecapt
Perhaps decreasing home values. That may even be more effective than unemployment.
The further reach to the impact on home prices is even less well linked.
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Here's the link between employment and housing prices -
Unemployment --> Delinquency --> Foreclosure --> Liquidation
The vast majority of homes have decreased in value over the last two years, yet most people are not walking away from their homes. At least not in the numbers you'd see if decreasing home values were a better predictor of foreclosure than unemployment.
People stay because it's their home and when they can afford to stay, most often they do. When they become unemployed, often times staying in the home is no longer an option. Purely anecdotal, but a thread was just started just yesterday where someone has declared they are going to walk away from their home. Although their home value has dropped for months and months on end, the cited catalyst for walking away is pending job loss.
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What that indicates is a market in which normal market forces are being over ridden by other mechanisms. It is and remains a mostly artificial market. Markets where growing volumes result in reduced inventory and decreased pricing are not natural ones.
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You've put the cart before the horse. Prices do not continue to fall in spite of growing sales volume, but rather sales volume grows because prices have fallen. This is how markets work.